2008 ANNUAL MEETING OF SHAREHOLDERS

Dear Shareholder:

On behalf of the Board of Trustees and the management of Northeast Utilities, it is my pleasure toinvite you to attend the 2008 Annual Meeting of Shareholders of Northeast Utilities on Tuesday, May 13,2008, at 10:30 a.m., at the offices of Public Service Company of New Hampshire, Energy Park, 780 NorthCommercial Street, Manchester, New Hampshire 03101 (directions are on the reverse side).

Information concerning the matters to be acted upon at the meeting is provided in the accompanyingNotice of Annual Meeting of Shareholders and Proxy Statement. We are very pleased that John S. Clarkeson,the Chairman Emeritus of The Boston Consulting Group, Inc., is a new nominee for the Board this year.In addition, our meeting agenda will include a discussion of the operations of the Northeast Utilities systemcompanies and an opportunity for questions.

This year, we are pleased to announce that we are taking advantage of the new Securities andExchange Commission rule that authorizes companies to furnish proxy materials to their shareholders over theInternet. This process expedites the delivery of proxy materials and allows materials to remain easilyaccessible to shareholders.

On March 31, 2008, we mailed to certain shareholders our Notice of Internet Availability of ProxyMaterials, which contains instructions for our shareholders’ use of this new process, including how to accessour 2008 Proxy Statement and Annual Report and how to vote online. In addition, the Notice of InternetAvailability of Proxy Materials contains instructions on how shareholders may (i) receive a paper copy of theProxy Statement and Annual Report or (ii) elect to receive your Proxy Statement and Annual Report only overthe Internet, if you received them by mail this year.

Whether or not you plan to attend the meeting, it is important that your shares be represented at themeeting. You may vote your shares over the Internet or by calling a toll-free telephone number. If you receiveda paper copy of the proxy card by mail, you may sign, date and mail the proxy card in the envelope provided.Instructions regarding all three methods of voting are contained in the Notice of Internet Availability of ProxyMaterials and the proxy materials.

On behalf of your Board of Trustees, I thank you for your continued support of Northeast Utilities.

Very truly yours,

CHARLES W. SHIVERYChairman of the Board, President andChief Executive Officer

March 31, 2008

Directions to

Public Service Company of New HampshireEnergy Park

780 North Commercial StreetManchester, NH 03101

Phone: (800) 562-3190

General Directions

From Hartford:

Take I-84 East to Sturbridge, Massachusetts and the Massachusetts Turnpike (I-90). Take the MassachusettsTurnpike East to Exit 10, I-290. Take I-290 East through Worcester, Massachusetts to I-495. Take I-495 Northto Route 3 in Lowell, Massachusetts. Take Route 3 towards Nashua, New Hampshire. Route 3 will become theEverett Turnpike toll road. (Do not follow signs for U.S. Route 3, which goes off the highway onto localroads.) After the toll booth in Bedford, New Hampshire, continue North to Manchester. The highway willbecome I-293 North. Take exit 6, Amoskeag Bridge exit. Stay in the right lane once off the exit ramp and turnright at the fork next to the Ramada Inn. Cross the Amoskeag Bridge in the right lane, and then take the exitfor Canal Street. At the end of the ramp for Canal Street, turn right at the traffic light onto Commercial Street.Public Service Company of New Hampshire (PSNH) Energy Park is about 50 yards down Commercial Streeton the right. (Approximately 21⁄2 hours).

From New York City:

Take I-95 North to New Haven, Connecticut. In New Haven, exit onto I-91 North. Follow I-91 to Hartford andthen take Exit 29 (North Routes 5 and 15 to I-84 East) onto I-84. Once on I-84, follow directions fromHartford, above. (Approximately 5 hours).

From Boston:

Take I-93 North to the exit for I-293 North. Take I-293 to Exit 6, Amoskeag Bridge exit. Stay to the right offthe exit ramp and bear right after the Ramada Inn. Cross the Amoskeag Bridge, and then take the exit for CanalStreet. At the end of the ramp for Canal Street, turn right at the traffic light onto Commercial Street. PSNHEnergy Park is about 50 yards down Commercial Street on the right. (Approximately 1 hour).

From Burlington, Vermont and points North:

Take I-89 to I-93. Travel South on I-93 to I-293. Take I-293 South to Exit 6, Amoskeag Bridge Exit. At theend of the ramp, bear right at the fork and you will be on Eddy Road. You will soon enter a large rotary. Moveinto the right lane and bear right at the fork next to the Ramada Inn. Cross the Amoskeag Bridge staying in theright lane, and then take the exit for Canal Street. At the end of the ramp for Canal Street, turn right at thetraffic light onto Commercial Street. PSNH Energy Park is about 50 yards down Commercial Street on theright.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held on May 13, 2008

To the Shareholders of Northeast Utilities:

Notice is hereby given that the Annual Meeting of Shareholders of Northeast Utilities (NU or theCompany) will be held on Tuesday, May 13, 2008, at 10:30 a.m., at the offices of Public Service Company ofNew Hampshire, Energy Park, 780 North Commercial Street, Manchester, New Hampshire 03101, for thefollowing purposes:

1. To elect twelve nominees as Trustees, the names of whom are set forth in the accompanyingProxy Statement, for the ensuing year;

2. To ratify the selection of Deloitte & Touche LLP as independent auditors for 2008; and

3. To transact any other business that may properly come before the meeting or any adjournmentthereof.

Only shareholders of record at the close of business on March 14, 2008 are entitled to receive noticeof and to vote at the meeting or any adjournment thereof. You are cordially invited to be present at the meetingand to vote. Whether or not you plan to attend the meeting, please ensure your shares are represented by votingeither through the Internet, by telephone or by completing, signing, dating and returning the accompanyingproxy in the enclosed pre-addressed envelope, which requires no postage if mailed in the United States. Youmay revoke your proxy at any time before the vote is taken by delivering to the Secretary a revocation, a proxybearing a later date (including by means of Internet or telephone vote) or by voting in person at the meeting.

By order of the Board of Trustees,

KERRY J. KUHLMANVice President and Secretary

107 Selden StreetBerlin, Connecticut 06037

Mailing Address:Post Office Box 270Hartford, Connecticut 06141-0270

March 31, 2008

IMPORTANT

Whether or not you plan to attend the meeting, we urge you to vote your shares over the Internet or via the toll-free telephone number, as we describe in the accompanying materials and the Notice of Internet Availability ofProxy Materials. As an alternative, if you received a paper copy of the proxy card by mail, you may sign, dateand mail the proxy card in the envelope provided. No postage is necessary if mailed in the United States.Voting over the Internet, via the toll-free telephone number or mailing a proxy card will not limit your right tovote in person or to attend the Annual Meeting.

TABLE OF CONTENTS

Page

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Questions and Answers about the Annual Meeting and Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Proposal 1: Election of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Governance of Northeast Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Board Committees and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Corporate Governance Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Corporate Responsibility Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Executive Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Finance Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15The Lead Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Meetings of the Board and its Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Selection of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Communications From Shareholders and Other Interested Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16The Code of Ethics and the Standards of Business Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Trustee Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Common Share Ownership of Certain Beneficial Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Common Share Ownership of Trustees and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Compensation Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Overall Objectives of Executive Compensation Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Elements of 2007 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Mix of Compensation Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Market Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Base Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Incentive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

2007 Annual Incentive Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262007 – 2009 Long-Term Incentive Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Restricted Share Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Performance Cash Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Supplemental Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Contractual Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39Tax and Accounting Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Compensation Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Grants of Plan-Based Awards During 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46Equity Grants Outstanding at December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Options Exercised and Stock Vested In 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48Pension Benefits in 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49Nonqualified Deferred Compensation in 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Potential Payments Upon Termination or Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Trustee Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62Section 16(a) Beneficial Ownership Reporting Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Proposal 2: Ratification of the Selection of Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65Relationship with Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65Report of the Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68Annual Report to Shareholders and Annual Report on Form 10-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

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NORTHEAST UTILITIES107 Selden Street

Berlin, Connecticut 06037

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

May 13, 2008

INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board ofTrustees of Northeast Utilities for use at the Annual Meeting of Shareholders to be held on May 13, 2008 at10:30 a.m., and at any adjournment of that meeting, at the offices of Public Service Company of NewHampshire, Energy Park, 780 North Commercial Street, Manchester, New Hampshire 03101.

Under rules and regulations recently adopted by the Securities and Exchange Commission, or SEC,instead of mailing a printed copy of our proxy materials to each shareholder of record or beneficial owner ofNortheast Utilities common shares (common shares), we have mailed a Notice of Internet Availability ofProxy Materials to each shareholder who holds fewer than 100 common shares and have made available tothese shareholders our proxy materials, which include our Proxy Statement and Annual Report, over theInternet. Shareholders who received a Notice of Internet Availability of Proxy Materials by mail did notreceive a printed copy of the proxy materials. However, these shareholders are entitled to request copies ofthese materials by following the instructions included in the Notice of Internet Availability of Proxy Materials.The Notice of Internet Availability of Proxy Materials also includes instructions for accessing the proxymaterials online and for voting common shares via telephone or the Internet.

We mailed the Notice of Internet Availability of Proxy Materials to shareholders on or aboutMarch 31, 2008.

If you hold common shares in your own name and not through a broker or another nominee, you mayvote your common shares as follows:

Š Access the Internet website listed on the proxy card included with this Proxy Statement orappearing on the Notice of Internet Availability of Proxy Materials and vote online;

Š Call the toll-free telephone number listed on the proxy card included with this ProxyStatement or appearing on the Notice of Internet Availability of Proxy Materials;

Š If you received a printed copy of our proxy materials by mail, then complete, sign, date andmail the proxy card in the enclosed envelope; or

Š Attend the Annual Meeting and vote in person.

If your common shares are held by a broker, bank or other nominee (i.e., in street name), you shouldreceive instructions from that person or entity that you must follow in order to vote these common shares. Youalso will be able to vote these common shares by telephone or internet.

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Your presence at the Annual Meeting will not automatically revoke your proxy. You may, however,revoke a proxy at any time before it is voted, as follows:

Š Deliver either a written notice of revocation of the proxy or a duly executed proxy bearing alater date addressed to O. Kay Comendul, Assistant Secretary, Northeast Utilities, Post OfficeBox 270, Hartford, Connecticut 06141-0270;

Š Re-vote on the Internet or by telephone; or

Š Attend the Annual Meeting and vote in person.

If you vote using the Internet, by telephone or by mailing a proxy card, the proxies will vote yourcommon shares as you direct. For the election of Trustees, you can specify whether your shares should bevoted for all, some or none of the listed nominees for Trustee. With respect to the proposal to ratify theselection of Deloitte & Touche LLP as our independent auditors, you may vote “for” or “against” the proposalor you may abstain from voting on the proposal.

If you vote using the Internet, by telephone or by mailing a proxy card without indicating yourinstructions, the proxies will vote your shares consistent with the recommendations of our Board of Trustees asstated in this Proxy Statement and in the Notice of Internet Availability of Proxy Materials, specifically for theelection of reach Trustee nominee and for the proposal to ratify the selection of Deloitte & Touche LLP as ourindependent auditors. If any other matters are properly presented at the Annual Meeting for consideration, thenthe proxies will have discretion to vote your common shares on those matters. As of the date of the ProxyStatement, we did not know of any other matters to be presented at the Annual Meeting.

Only holders of common shares of record at the close of business on March 14, 2008 (the record date)are entitled to receive notice of and to vote at the meeting or any adjournment thereof. On the record date,there were approximately 47,566 holders of record and 156,420,690 common shares outstanding. You areentitled to one vote on each matter to be voted on at the annual meeting for each common share that you heldon the record date. There is no cumulative voting.

The principal office of Northeast Utilities is located at One Federal Street, Building 111-4,Springfield, Massachusetts 01105. The general offices of Northeast Utilities and its subsidiaries are located at107 Selden Street, Berlin, Connecticut 06037, and the mailing address is Post Office Box 270, Hartford,Connecticut 06141-0270. This Proxy Statement, the accompanying proxy card and annual report are beingmailed to shareholders commencing on or about March 31, 2008.

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

Q: WHAT AM I VOTING ON?

A: You are being asked by the Board of Trustees of Northeast Utilities to vote on two proposals. The firstproposal is the election of twelve nominees to our Board of Trustees. The Corporate GovernanceCommittee of the Board of Trustees has nominated twelve persons for election as Trustees. Elevennominees were elected as Trustees at our 2007 Annual Meeting of Shareholders and are currentlyserving as Trustees. The twelfth nominee, Mr. John S. Clarkeson, is not currently serving as a Trusteeand is being presented to shareholders for election for the first time. For more information on eachnominee, please turn to “Election of Trustees” beginning on page 7.

You also are being asked to ratify the selection of Deloitte & Touche LLP as Northeast Utilities’independent auditors for 2008. For more information on this selection, please turn to “Ratification ofthe Selection of Auditors” beginning on page 65.

Q: WILL ANY OTHER MATTERS BE VOTED ON?

A: We do not expect any other matters to be considered at the Annual Meeting. However, if a matter notdescribed in this Proxy Statement is legally and properly brought before the Annual Meeting by ashareholder, the individuals designated as proxies will vote on the matter in accordance with theirjudgment of what is in the best interest of Northeast Utilities.

Q: WHO IS ENTITLED TO VOTE?

A: You are entitled to vote at the annual meeting if you held common shares on the record date,March 14, 2008. If you received a Notice of Internet Availability of Proxy Materials, it indicates thenumber of common shares that you held on the record date. If you received printed proxy materials,the enclosed proxy card indicates the number of common shares that you held on the record date. Asof the record date, 156,420,690 common shares were issued and outstanding. You are entitled to onevote on each matter to be voted on at the annual meeting for each common share that you held on therecord date.

Q: HOW DO I VOTE?

A: You can vote in any one of the following ways:

Š You can vote using the Internet. Follow the instructions in the Notice of Internet Availability ofProxy Materials or on the proxy card. The Internet procedures are designed to authenticate ashareholder’s identity to allow shareholders to vote their shares and confirm that their instructionshave been properly recorded.

Internet voting facilities for shareholders of record are available 24 hours a day and will close at11:59 p.m. (EDT) on May 12, 2008. You may access this Proxy Statement and related materialsby going to http://bnymellon.mobular.net/bnymellon/nu. If you received a Notice of InternetAvailability of Proxy Materials, you should follow the instructions appearing on the Notice.

Š You can vote by telephone. The proxy card and the Notice of Internet Availability of ProxyMaterials each includes a toll-free number you can call to vote your common shares. Voting bytelephone is available 24 hours a day and will close at 11:59 p.m. (EDT) on May 12, 2008.

Š You can vote by mail. If you received a paper proxy card, you may vote by mail by completing,signing and dating the proxy card and returning it in the pre-addressed, postage-prepaid envelopeaccompanying the paper proxy card. Proxy cards submitted by mail must be received by the timeof the Annual Meeting in order for your shares to be voted.

Š You can vote in person at the Annual Meeting by delivering your completed proxy card in personat the Annual Meeting or by completing a ballot available upon request at the meeting.

Š If your common shares are held by a broker, bank or other nominee (i.e., in street name), youshould receive instructions from that person or entity that you must follow in order to vote your

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common shares. You may vote by mail by requesting a voting instruction card in accordance withthe instructions received from your broker or other agent. Complete, sign and date the votinginstruction card provided by the brokers or other agents and return it in the pre-addressed, postage-prepaid envelope provided to you. You also will be able to vote these shares by Internet ortelephone.

Regardless of how you choose to vote, your vote is important, and we encourage you to votepromptly.

Q: HOW MANY VOTES ARE NEEDED TO HOLD THE MEETING?

A: The presence in person or by proxy at the Annual Meeting of the holders of a majority of all commonshares issued and outstanding and entitled to vote at the Annual Meeting is required for a quorum inorder to hold the meeting.

Q: HOW MANY VOTES ARE NEEDED TO ELECT THE NOMINEES FOR TRUSTEE?

A: The affirmative vote of a majority of all common shares issued and outstanding and entitled to vote atthe Annual Meeting is required to elect a Trustee.

Q. HOW MANY VOTES ARE NEEDED TO APPROVE THE RATIFICATION OFDELOITTE & TOUCHE LLP AS NORTHEAST UTILITIES’ INDEPENDENT AUDITORSFOR THE YEAR ENDING DECEMBER 31, 2008?

A: The affirmative vote of a majority of the votes cast at the Annual Meeting is required to ratify theselection of Deloitte & Touche LLP as Northeast Utilities’ independent auditors for the year endingDecember 31, 2008.

Q: HOW ARE VOTES COUNTED?

A: In determining whether we have a quorum, we count all properly submitted proxies and ballots,including abstentions, broker non-votes and withheld votes, as present and entitled to vote.Abstentions and broker non-votes, as well as votes withheld, are not considered votes cast and will notbe counted for or against the proposal to ratify the selection of Deloitte & Touche LLP. However,because the election of each Trustee requires the affirmative vote of at least a majority of the commonshares outstanding and entitled to vote at the Annual Meeting, abstentions, broker non-votes and voteswithheld with respect to a particular nominee will have the same effect as a vote against suchnominee. If you vote using the Internet, by telephone or by mailing a proxy card, the proxies will voteyour common shares as you direct. If you vote using the Internet, by telephone or by mailing a proxycard without indicating your instructions, the proxies will vote your common shares consistent withthe recommendations of our Board of Trustees as stated in this Proxy Statement and in the Notice ofInternet Availability of Proxy Materials, specifically for the election of reach Trustee nominee and forthe proposal to ratify the selection of Deloitte & Touche LLP as our independent auditors for 2008.

Q: WHO WILL COUNT THE VOTES?

A: Representatives of The Bank of New York, our Registrar and Transfer Agent, will count the votes.

Q: WHAT ARE BROKER NON-VOTES?

A: Broker non-votes occur when nominees, such as banks and brokers holding shares on behalf ofbeneficial owners, do not receive voting instructions from the beneficial holders at least ten daysbefore the Annual Meeting. If that happens, the nominees may vote those shares only on mattersdeemed “routine” by the New York Stock Exchange (NYSE). On non-routine matters, nomineescannot vote without instructions from the beneficial owner, resulting in a so-called “broker non-vote.”The election of our Trustees and the ratification of the selection of our auditors are considered“routine” matters.

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Q: WHAT SHARES ARE COVERED BY THE NOTICE OF INTERNET AVAILABILITY OFPROXY MATERIALS AND PROXY CARD?

A: For each account in which you own common shares:

Š Directly in your name as the shareholder of record; or

Š Indirectly through a broker, bank or other holder of record;

you should have received either: (i) a Notice of Internet Availability of Proxy Materials; or (ii) a paperor electronic proxy card.

Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE NOTICE OF INTERNETAVAILABILITY OF PROXY MATERIALS OR PROXY CARD?

A: If you receive more than one Notice of Internet Availability of Proxy Materials and/or more than oneproxy card, then you have multiple accounts in which you own common shares. Please follow allinstructions to ensure that all of your shares are voted. In addition, for your convenience, werecommend that you contact your broker, bank or our transfer agent to consolidate as many accountsas possible under a single name and address. Our transfer agent is The Bank of New York. If you haveany questions concerning common shares you hold in your name, including address changes, namechanges, requests to transfer shares and similar issues, you may contact the Investors RelationsDepartment of The Bank of New York by mail at P.O. Box 11258, Church Street Station, New York,New York 10286-1258, by telephone at (800) 999-7269 or on the Internet at www.stockbny.com.

Q: HOW CAN I CHANGE MY VOTE?

A: You can revoke your proxy and change your vote at any time before the polls close at the AnnualMeeting by:

Š Delivering either a written notice of revocation of the proxy or a duly executed proxy bearing alater date to O. Kay Comendul, Assistant Secretary, Northeast Utilities, Post Office Box 270,Hartford, Connecticut 06141-0270;

Š Re-voting on the Internet or by telephone until 11:59 p.m. (EDT) on May 12, 2008; or

Š Attending the Annual Meeting and voting in person.

Q: WHEN IS THE DEADLINE FOR SUBMITTING SHAREHOLDER PROPOSALS FOR THE2009 ANNUAL MEETING OF SHAREHOLDERS?

A: You may submit proposals for consideration at the 2009 Annual Meeting, including Trusteenominations, in accordance with the following:

To include a proposal in our Proxy Statement for the 2009 Annual Meeting of Shareholders, proposalsby shareholders must be received by our Secretary at our principal executive offices no later thanNovember 30, 2008, and must satisfy the conditions established by the Securities and ExchangeCommission. Written notice of proposals of shareholders to be considered at the 2009 Annual Meetingwithout inclusion in next year’s proxy statement must be received on or before February 13, 2009 inorder to be considered timely for purposes of Rule 14a-4 under the Securities Exchange Act of 1934.If a notice is received after February 13, 2009, then the notice will be considered untimely and theproxies held by management may provide the discretion to vote against such proposal, even thoughthe proposal is not discussed in the Proxy Statement. Proposals should be addressed to: O. KayComendul, Assistant Secretary, Northeast Utilities, Post Office Box 270, Hartford, Connecticut06141-0270.

Q: WHO PAYS THE COST OF SOLICITING THE PROXIES REQUESTED?

A: We will bear the cost of soliciting proxies on behalf of the Board of Trustees. In addition to the use ofthe mails, proxies may be solicited by personal interview, telephone or electronic mail, by Trustees,officers or employees of Northeast Utilities or its affiliate, Northeast Utilities Service Company, who

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will not be specially compensated for such activities, and by employees of The Bank of New York,our Transfer Agent and Registrar. We have also retained Morrow & Co., LLC, a professional proxysoliciting firm, to assist in the solicitation of proxies for a fee of $12,000, plus reimbursement ofcertain out-of-pocket expenses. We also will request persons, firms and other companies holdingshares in their names or in the name of their nominees, which are beneficially owned by others as ofMarch 14, 2008, to send proxy materials to and obtain proxies from the beneficial owners, and we willreimburse those holders for any reasonable expenses that they incur.

Q: HOW CAN I OBTAIN ELECTRONIC ACCESS TO THE PROXY MATERIALS, INSTEADOF RECEIVING MAILED COPIES?

A: This Proxy Statement and our 2007 Annual Report are available on our website at www.nu.com in theInvestors section under the link entitled “Financial & SEC Reports.” You may elect to enroll in“electronic access” to receive future proxy statements and annual reports electronically instead ofreceiving paper copies in the mail. If you are a shareholder of record, you can choose this option andsave us the cost of producing and mailing these documents by visiting www.bnymellon.com/shareowner/isd and following the instructions. You will need to enter your shareholder accountnumber and other information to verify your identity. If your common shares are held by a broker,bank or other nominee (i.e., in street name), and you wish to enroll in electronic access, you shouldcontact your broker.

If you choose to receive future proxy statements and annual reports electronically, each year we willtimely notify you when these documents become available. Your choice to receive these documentselectronically will remain in effect until you instruct us otherwise. You need not elect electronicaccess each year.

Q: WHERE CAN I GET A COPY OF THE NORTHEAST UTILITIES ANNUAL REPORT?

A: If you were a shareholder of record on March 14, 2008 you should have received a copy of ourAnnual Report to Shareholders for the year ended December 31, 2007 either with this ProxyStatement or prior to its receipt. If you have not received the Annual Report to Shareholders or if youwould like a copy of our Annual Report on Form 10-K filed with the Securities and ExchangeCommission, you may request one, free of charge, from the Corporate Secretary’s office at thefollowing address:

O. Kay ComendulAssistant SecretaryNortheast UtilitiesPost Office Box 270Hartford, Connecticut 06141-0270

Our Annual Report on Form 10-K is also available on our website at www.nu.com/investors/reports/sec.asp.

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PROPOSAL 1

ELECTION OF TRUSTEES

Our Board of Trustees oversees the business affairs and management of Northeast Utilities. The Boardcurrently consists of 11 Trustees, only one of whom, Charles W. Shivery, our Chairman of the Board,President and Chief Executive Officer, is a member of management.

Twelve persons have been nominated for election as Trustees at the Annual Meeting to serve until thenext annual meeting and until their successors have been elected and qualified. Unless you specify otherwise,the enclosed proxy will be voted to elect the nominees named on pages 7-11 below as Trustees. Except forMr. Clarkeson, each nominee has been previously elected as a Trustee by shareholders and is currently servingas a Trustee.

If one or more of the nominees should become unavailable for election, which the Board of Trusteesdoes not currently anticipate, the proxy may be voted for a substitute person or persons, but not more than atotal of 12 nominees. The Northeast Utilities Declaration of Trust, as amended by the shareholders in 2000,provides for a total of 13 Trustees in order to afford the Board of Trustees the flexibility to add Trustees withtargeted expertise as appropriate between annual meetings of shareholders.

Set forth on the following pages is each nominee’s name, age, date first elected as a Trustee, and abrief summary of the nominee’s business experience. Each nominee has indicated he or she will stand forelection and will serve as a Trustee if elected. An affirmative vote of a majority of the common sharesoutstanding as of the record date will be required to elect each nominee. Abstentions, broker non-votes andwithheld votes will be counted in the determination of quorum and will have the same effect as a vote against anominee.

The Board of Trustees recommends that shareholders vote FOR the election of

the nominees listed below

RICHARD H. BOOTH, 61Trustee since 2001.

Mr. Booth is Chairman and a director of HSB Group, Inc. , a specialty insurer andreinsurer, and Chairman and a director of Hartford Steam Boiler Inspection andInsurance Company, a provider of insurance and engineering services andinvestments. He is also a corporate officer of American International Groupresponsible for the company’s Strategic Relationship Group. From January 2000 untilJuly 2007, he was Chairman and Chief Executive Officer and a director of HartfordSteam Boiler Inspection and Insurance Company. He is a member of the AmericanInstitute of Certified Public Accountants, the Connecticut Society of CPAs, theHartford Society of Financial Analysts, the Society of Financial Service Professionalsand the Association for Investment Management & Research. Mr. Booth is a memberof the Boards of WorldBusiness Capital LLC, Century Capital Management, theMetroHartford Alliance, Inc. and the Florence Griswold Museum, and a member ofthe Governor’s Competitiveness Council and the Advisory Council of the UrbanLeague of Greater Hartford. Mr. Booth received B.S. and M.S. degrees from theUniversity of Hartford and is a Certified Public Accountant.

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JOHN S. CLARKESON, 64Nominee for Trustee.

Mr. Clarkeson has served as the Chairman Emeritus of The Boston ConsultingGroup, Inc. since 2007. Previously, Mr. Clarkeson served as Co-Chairman of theBoard of The Boston Consulting Group, Inc. from 2004 to 2007, Chairman of TheBoston Consulting Group, Inc. from 1998 to 2003, and Chief Executive Officer andPresident from 1986 to 1997. He is a Director of the Cabot Corporation and theNational Bureau of Economic Research, a trustee of Educational Testing Service, theMassachusetts General Physicians Organization, Inc. and Wellesley College, and amember of the INSEAD board. Mr. Clarkeson received an A.B. degree magna cumlaude from Harvard College, where he was a Harvard National Scholar, and anM.B.A. from Harvard Business School.

COTTON M. CLEVELAND, 55Trustee since 1992.

Ms. Cleveland has been President of Mather Associates, a firm specializing inleadership and organizational development for business, public and nonprofitorganizations, since 1981. She is a Director of The National Grange Mutual InsuranceCompany and the Ledyard National Bank and the Moderator of the Town of NewLondon, New Hampshire and the New London/Springfield Water Precinct.Ms. Cleveland has served on the Board of the New Hampshire Center for PublicPolicy and as a Director of Bank of Ireland First Holdings. Ms. Cleveland has alsoserved as Chair, Vice Chair and member of the Board of Trustees of the UniversitySystem of New Hampshire, as Co-Chair of the Governor’s Commission on NewHampshire in the 21st Century, and as an Incorporator for the New HampshireCharitable Foundation. Ms. Cleveland received a B.S. magna cum laude from theUniversity of New Hampshire, Whittemore School of Business and Economics.

SANFORD CLOUD, JR., 63Trustee since 2000.

Mr. Cloud has been Chairman and Chief Executive Officer of The Cloud Company,LLC, a real estate development and business investment firm, since 2005. Mr. Cloudis a past President and Chief Executive Officer of the National Conference forCommunity and Justice, a former partner at the law firm of Robinson and Cole andserved for two terms as a state senator of Connecticut. A former Vice President ofCorporate Public Involvement of Aetna Inc., Mr. Cloud is currently a Director of ThePhoenix Companies, Inc. and Ironwood Mezzanine Fund, L.P. He is also a Directorof the MetroHartford Alliance, Inc., The Connecticut Health Foundation and theUniversity of Connecticut Medical Health Center. Mr. Cloud received a B.A. fromHoward University, a J.D. cum laude from the Howard University Law School, andan M.A. in Religious Studies from the Hartford Seminary.

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JAMES F. CORDES, 67Trustee since 2001.

Mr. Cordes has over 30 years’ experience in the natural gas business, having servedas Executive Vice President of The Coastal Corporation and President of the NaturalGas Group of The Coastal Corporation (retired 1997) and President of AmericanNatural Resources Company. Mr. Cordes is a Director of Comerica, Inc. He is pastchairman of the Interstate Natural Gas Association of America and has served as aDirector and member of the Executive Committee of the American Gas Association.He has also served as a Director and member of the Executive Committees of boththe Detroit Symphony and the Houston Symphony. Mr. Cordes received a B.S. fromSt. Louis University, an M.B.A. from Creighton University, and an M.S. in Industrialand Management Systems Engineering from the University of Nebraska.

E. GAIL DE PLANQUE, 63Trustee since 1995.

Dr. de Planque has been President of Strategy Matters, Inc., a consulting firm, andDirector, Energy Strategists Consultancy, Ltd., since 1998. Dr. de Planque has over35 years’ experience in nuclear physics and industry regulation and is a Fellow of theAmerican Association for the Advancement of Science, Fellow and past President ofthe American Nuclear Society, a member of the National Academy of Engineering,and has served as a Commissioner with the United States Nuclear RegulatoryCommission and as Director of the United States Department of Energy’sEnvironmental Measurements Laboratory. Dr. de Planque serves as a Director ofBHP Billiton, Plc and BHP Billiton Ltd., Landauer, Inc., and EnergySolutions, Inc.Dr. de Planque received an A.B. cum laude in Mathematics from ImmaculataUniversity, an M.S. in Physics from the New Jersey Institute of Technology, and aPh.D. in Environmental Health Science from New York University.

JOHN G. GRAHAM, 69Trustee since 2003.

From 1999 to 2006, Mr. Graham served as President and Chief Executive Officer anda Director of UMICO Holdings, Inc. and UMI Insurance Company, both ofParsippany, New Jersey. From 1999 to 2005, he served as Adjunct Professor of Lawat Rutgers Law School, where he taught in the fields of the law of economicregulation, energy law and insurance law. From 1999 to 2003, Mr. Graham served asa consultant to various firms concerning utility industry strategic and restructuringissues. Mr. Graham has served as Senior Vice President and Chief Financial Officerof GPU, Inc., and Chief Financial Officer of its utility subsidiaries (1987-1999), as aDirector (1982-1999) and former Chairman (1995-1998) of Nuclear ElectricInsurance Limited, and as a Director and member of audit, directors andcompensation committees of Viatel, Inc. (1998-2002), and as a Director and auditcommittee chairman of Coho Energy, Inc. (2000-2001). Mr. Graham received anA.B. cum laude from Upsala College and a J.D. magna cum laude from Rutgers LawSchool, Newark, New Jersey.

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ELIZABETH T. KENNAN, 70Lead Trustee since 1996;Trustee since 1980.

Dr. Kennan is the President Emeritus of Mount Holyoke College and a partner inCambus-Kenneth Farm, a specialized horse and cattle breeder, since 2000.Dr. Kennan has served as President of Five Colleges, Incorporated, as a Trustee ofNotre Dame University, and as a member of the Folger Shakespeare LibraryCommittee and the National Committee on Library Resources, and holds honorarydegrees from a number of institutions. Dr. Kennan is a Trustee of The Putnam MutualFunds, the National Trust for Historic Preservation, Centre College and MidwayCollege. She acted as interim Chairman of the Board of Northeast Utilities fromJanuary 1, 2004 to March 29, 2004. Dr. Kennan received an A.B. summa cum laudefrom Mount Holyoke College, an M.A. from Oxford University (England), and aPh.D. from the University of Washington.

KENNETH R. LEIBLER, 59Trustee since 2006.

Mr. Leibler is a founding partner and the former Chairman of the Boston OptionsExchange (2004-February, 2007). Mr. Leibler is also a past Chairman and ChiefExecutive Officer of the Boston Stock Exchange (2001-2005), and a past President ofLiberty Financial Companies (1990-2000), where he also served as Chief ExecutiveOfficer (1995-2000) and Chief Operating Officer (1990-1995). He also held variouspositions at the American Stock Exchange, including President and Chief OperatingOfficer as well as Chief Financial Officer (1975-1990). Mr. Leibler is a Trustee ofThe Putnam Mutual Funds, a director of The Ruder Finn Group, a Trustee of BethIsrael Deaconess Medical Center, and a past Vice Chairman of the Board of Directorsof ISO New England, the independent operator of New England’s bulk electrictransmission system. Mr. Leibler received a B.A. magna cum laude from SyracuseUniversity.

ROBERT E. PATRICELLI, 68Trustee since 1993.

Mr. Patricelli has been Chairman and Chief Executive Officer of Women’s HealthUSA, Inc., a provider of women’s health care services, since 1997 and of EvolutionBenefits, Inc., a provider of employee benefit services, since 2000. Mr. Patricelli wasChairman, President and Chief Executive Officer of Value Health, Inc. (1987-1997)and previously served as Executive Vice President of CIGNA Corporation andPresident of CIGNA’s Affiliated Businesses Group. Mr. Patricelli has also heldvarious positions in the federal government, including White House Fellow, counselto a United States Senate Subcommittee, Deputy Undersecretary of the Department ofHealth, Education and Welfare and Administrator of the United States Urban MassTransportation Administration. Mr. Patricelli is a Director of CuraGen Corporationand Prodigy Health Group. He is also a Director of the MetroHartford Alliance, Inc.,The Bushnell and The Connecticut Center for Science and Exploration. Mr. Patricellireceived a B.A. from Wesleyan University and a J.D. from Harvard Law School, andwas a Fulbright Scholar at the University of Paris.

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CHARLES W. SHIVERY, 62Trustee since 2004.

Mr. Shivery has been Chairman of the Board, President and Chief Executive Officerof Northeast Utilities since March 29, 2004 and Chairman and a Director of TheConnecticut Light and Power Company, Public Service Company of New Hampshire,Western Massachusetts Electric Company and Yankee Gas Services Company sinceJanuary 19, 2007. Mr. Shivery assumed his current position at Northeast Utilitiesafter serving as interim President beginning in January 2004. From June 2002 untilDecember 2003, Mr. Shivery served as President-Competitive Group of NortheastUtilities, as President and Chief Executive Officer and a Director of NU Enterprises,Inc., and as Chairman and a Director of most of Northeast Utilities’ competitivesubsidiaries. In 2002, Mr. Shivery retired from Constellation Energy Group, Inc.(Constellation), parent company of Baltimore Gas and Electric Company (BG&E)and other energy-related businesses, having held numerous senior managementpositions at Constellation. Mr. Shivery is a Director of Energy Insurance Mutual, theConnecticut Business & Industry Association, Association of Edison IlluminatingCompanies, Connecticut Science Center, Connecticut Children’s Medical Center,Edison Electric Institute, and the Electric Power Research Institute. Mr. Shiveryreceived B.A. and B.S. degrees from The Johns Hopkins University and an M.B.A.from the University of Baltimore.

JOHN F. SWOPE, 69Trustee since 1992.

During 1999 and 2000, Mr. Swope served as President and Chief Executive Officerof Public Broadcasting Service. Mr. Swope, an attorney, served as of counsel to thelaw firm of Sheehan Phinney Bass + Green PA from 1995 to 1997, and as Presidentof Chubb Life Insurance Company of America from 1980 to 1994, after serving invarious executive capacities at Chubb Life and its predecessor companies since theearly 1970’s. Mr. Swope is a Director of the New Hampshire Business Committee forthe Arts and New Hampshire Public Radio, a Trustee of The Currier Museum of Artand Tabor Academy, and a Member of the Corporation at the Woods HoleOceanographic Institution. Mr. Swope received a Bachelor’s Degree from AmherstCollege and a J.D. from Yale Law School.

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GOVERNANCE OF NORTHEAST UTILITIES

Board Committees and Responsibilities

The Board of Trustees of Northeast Utilities has six standing committees: the Audit Committee, theCompensation Committee, the Corporate Responsibility Committee, the Corporate Governance Committee,the Executive Committee and the Finance Committee, each of which consists of members appointed by theTrustees upon the recommendation of the Corporate Governance Committee. None of the committee membersis employed by us or our subsidiaries, except for Mr. Shivery, our Chairman, President and Chief ExecutiveOfficer (CEO), who is a member of the Executive Committee. The Corporate Governance Committeeperforms the functions of a nominating committee. The Board of Trustees has adopted a written charter foreach of its committees and for the Lead Trustee as well as written Corporate Governance Guidelines. TheCorporate Governance Guidelines and committee charters are available on our website at the internet addressesappearing in the committee descriptions below. Printed copies of these documents are available to anyshareholder upon written request to our Assistant Secretary at the address set forth on page 6 of this ProxyStatement. The table below shows the Trustees who currently serve on each committee and number ofcommittee meetings conducted in 2007. The functions of the committees are described in the paragraphsfollowing the table.

Board Committees

Name Audit CompensationCorporate

GovernanceCorporate

Responsibility Executive Finance

Richard H. Booth VC M M CCotton M. Cleveland M VC MSanford Cloud, Jr. M C M MJames F. Cordes M M C ME. Gail de Planque C M M MJohn G. Graham C M MElizabeth T. Kennan * M M M M VC MKenneth R. Leibler M M VCRobert E. Patricelli VC M MCharles W. Shivery CJohn F. Swope M VC MCommittee Meetings 10 12 12 4 0 7

C: Committee ChairVC: Committee Vice ChairM: Committee Member* Lead Trustee

Audit Committee

The Audit Committee consists of Mr. Graham (Chair), Mr. Booth (Vice Chair), Mr. Cordes, Dr.Kennan, Mr. Leibler, and Mr. Swope.

The Audit Committee meets independently with the internal and independent auditors of NortheastUtilities and its subsidiaries and with management at least quarterly. Following each committee meeting, theAudit Committee reports to the full Board. The Audit Committee reviews and evaluates the auditors’ activities,procedures and recommendations to assist the Board of Trustees in monitoring the integrity of our financialstatements, the independent auditors’ qualifications and independence, the performance of our internal auditfunction and independent auditors, and our compliance with legal and regulatory requirements. The AuditCommittee has the sole authority to select or replace the independent auditors and is directly responsible fortheir compensation and oversight of their work. No member of the Audit Committee is employed by NortheastUtilities or its subsidiaries. Each member of the Audit Committee meets the financial literacy requirements ofthe New York Stock Exchange and Securities and Exchange Commission. The Board of Trustees hasaffirmatively determined that Messrs. Booth, Graham and Leibler are “audit committee financial experts,” as

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that term is defined by the Securities and Exchange Commission. Each member of the Audit Committee meetsthe independence requirements of the New York Stock Exchange and Securities and Exchange Commissionand under our Corporate Governance Guidelines. A copy of the Committee’s charter, which has been adoptedby our Board of Trustees, is available on our website at www.nu.com/investors/corporate_gov/charter_audit.asp.

Compensation Committee

The Compensation Committee consists of Dr. de Planque (Chair), Mr. Patricelli (Vice Chair),Mr. Booth, Ms. Cleveland, Mr. Cloud, Mr. Cordes, and Dr. Kennan. The Board of Trustees has affirmativelydetermined that each member of the Compensation Committee meets the independence requirements of theNew York Stock Exchange and Securities and Exchange Commission and under our Corporate GovernanceGuidelines.

The Compensation Committee is responsible for the compensation and benefits programs for allexecutive officers in the Northeast Utilities system and has overall authority to establish and interpret ourexecutive compensation programs. The Compensation Committee is also responsible for equity grants andretirement benefit plans for all employees. The Compensation Committee establishes and reviews ourexecutive compensation strategy in order to align organization strategies, goals and performance withappropriate compensation for our executive officers and Trustees. The Compensation Committee evaluatescomponents of total compensation and assesses performance against goals, market competitive data and otherappropriate factors. The Compensation Committee is authorized to grant share awards to our executiveofficers. The Compensation Committee makes recommendations to the Board and shareholders with respect tothe adoption, amendment or termination of executive compensation and benefits plans, policies and practices.The Compensation Committee has sole authority to select and retain independent experts and consultants in thefield of executive compensation to provide advice with respect to market data, competitive information, andexecutive compensation trends. The Compensation Committee also reviews and approves the compensation ofthe non-employee members of the Board of Trustees.

Our CEO works with the Compensation Committee Chair and our Senior Vice President & GeneralCounsel to establish the agenda for Compensation Committee meetings, but our CEO does not have the abilityto call Compensation Committee meetings. The compensation consultant may initiate contact with our CEO,but our CEO may not initiate contact with the consultant without the consent of the Chair of the CompensationCommittee. Annually, the Compensation Committee and the Corporate Governance Committee meet togetherto review and approve corporate goals and individual objectives relevant to the compensation of the CEO, andto evaluate the CEO’s performance in light of those goals and objectives. While the CEO suggests appropriategoals, he does not participate in establishing individual performance measures or targets that affect hiscompensation. The Compensation Committee and the Corporate Governance Committee meet together inexecutive session to establish performance criteria for the CEO and to recommend to the independent Trusteesthe CEO’s total compensation based on the annual evaluation. In addition, in collaboration with the CEO, theCompensation Committee oversees the evaluation of those executive officers reporting directly to the CEO.When establishing corporate goals, individual objectives and total compensation for these executive officersand certain other elected officers, the Compensation Committee considers recommendations from the CEO, theVice President of Human Resources and the Director of Human Resources (Compensation and Benefits) aswell as advice from compensation consultants.

In September 2006, the Compensation Committee retained Semler Brossy Consulting Group (SemlerBrossy) to perform an annual competitive assessment of our compensation programs and practices, constructappropriate peer groups, provide market competitive compensation data, recommend an appropriate mix ofcompensation elements, assist the Compensation Committee in performing the CEO performance evaluation,and update the Compensation Committee on emerging trends. Since September 2006, Semler Brossy’srepresentative has attended all Compensation Committee meetings. Semler Brossy has been engaged toperform work only for the Compensation Committee and not for Northeast Utilities.

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The Compensation Committee has delegated the negotiation of certain compensation arrangementsand administration of the Compensation Committee’s responsibilities to certain executive officers. Theseexecutive officers work with the Compensation Committee and Semler Brossy to propose compensationelements that provide appropriate incentives to meet our goals and reward performance by identifyingcomponents of our business plan that are critical to achieving our corporate earnings objectives. Further,executive officers provide context regarding the degree of difficulty in attaining certain goals. In 2007, theCompensation Committee delegated to the Compensation Committee Chair and our CEO the authority tonegotiate and agree upon compensation arrangements for several of our executive officers, including theexecutive officers responsible for (i) strategic planning; (ii) transmission projects, engineering andmaintenance; (iii) communications; and (iv) financial planning. None of these executive officers is a “NamedExecutive Officer” in this Proxy Statement. The Compensation Committee has not delegated any of itsresponsibilities to any other persons. A copy of the Compensation Committee’s charter is available on ourwebsite at www.nu.com/investors/corporate_gov/charter_compensation.asp.

Compensation Committee meetings may include the compensation consultant as well as members ofmanagement and others invited by the Chair of the Compensation Committee. The Compensation Committeealso meets in executive session. The Chair of the Compensation Committee reports to the full Board followingeach committee meeting.

Corporate Governance Committee

The Corporate Governance Committee consists of Mr. Cloud (Chair), Ms. Cleveland (Vice Chair),Dr. de Planque, Dr. Kennan, Mr. Leibler, and Mr. Patricelli. The Corporate Governance Committee isresponsible for developing, overseeing and regularly reviewing our Corporate Governance Guidelines andrelated policies. The Corporate Governance Committee also serves as a nominating committee, establishingcriteria for new Trustees and identifying and recommending prospective Board candidates. In addition, theCorporate Governance Committee evaluates the performance of the Board and its committees. In conjunctionwith the Compensation Committee, the Committee reviews and approves corporate goals and objectivesrelated to CEO compensation and establishes and implements the CEO evaluation process. Following eachmeeting, the Corporate Governance Committee reports to the full Board. No member of the CorporateGovernance Committee is employed by Northeast Utilities or its subsidiaries. The Board of Trustees hasaffirmatively determined that each member of the Corporate Governance Committee meets the independencerequirements of the New York Stock Exchange and Securities and Exchange Commission and under ourCorporate Governance Guidelines. A copy of the Committee’s charter is available on our website atwww.nu.com/investors/corporate_gov/charter_corporate_gov.asp.

Corporate Responsibility Committee

The Corporate Responsibility Committee consists of Mr. Cordes (Chair), Mr. Swope (Vice Chair),Ms. Cleveland, Mr. Cloud, Dr. de Planque, and Dr. Kennan. The Corporate Responsibility Committee reviewsthe policies and practices of Northeast Utilities and its subsidiaries on public issues having broad social orcommunity significance, the implementation of those policies and the Company’s and subsidiaries’ conduct ofbusiness as responsible corporate citizens. The Corporate Responsibility Committee’s responsibilities includeoversight of our environmental, safety, diversity, and compliance and ethics activities, with the exception ofthose actions relating to financial, accounting or auditing matters, which are reviewed by the Audit Committee.Following each meeting, the Corporate Responsibility Committee reports to the full Board. No member of theCorporate Responsibility Committee is employed by Northeast Utilities or its subsidiaries. A copy of theCommittee’s charter is available on our website at www.nu.com/investors/corporate_gov/charter_corporate_affairs.asp.

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Executive Committee

The Executive Committee consists of Mr. Shivery (Chair), Dr. Kennan (Vice Chair), Mr. Booth,Mr. Cloud, Mr. Cordes, Dr. de Planque, and Mr. Graham. The Executive Committee is empowered to exerciseall the authority of the Board, subject to certain limitations set forth in our Declaration of Trust, during theintervals between meetings of the Board. A copy of the Committee’s charter is available on our website atwww.nu.com/investors/corporate_gov/charter_corporate_exec.asp.

Finance Committee

The Finance Committee consists of Mr. Booth (Chair), Mr. Leibler (Vice Chair), Mr. Graham,Dr. Kennan, Mr. Patricelli, and Mr. Swope. The Finance Committee assists the Board in fulfilling its fiduciaryresponsibilities relating to financial plans, policies and programs for Northeast Utilities and its subsidiaries.Following each meeting, the Finance Committee reports to the full Board. No member of the FinanceCommittee is employed by Northeast Utilities or its subsidiaries. A copy of the Committee’s charter isavailable on our website at www.nu.com/investors/corporate_gov/charter_finance.asp.

The Lead Trustee

Dr. Kennan was designated as the Lead Trustee for the Board of Trustees in 1996 and servedthroughout 2007 in that capacity. As Lead Trustee, her duties include acting as a liaison between the Board andour Chief Executive Officer, organizing the Board’s evaluation of the Chief Executive Officer, chairingnon-management and (in the absence of the Chairman and the Vice Chairman, if any) executive sessions of theBoard, and leading the Board in anticipating and responding to problems where management’s performancemay be in question. A copy of the Lead Trustee’s charter is available on our website at www.nu.com/investors/corporate_gov/charter_lead.asp.

Meetings of the Board and its Committees

In 2007, the Board of Trustees held 14 regular meetings, the non-management Trustees held threemeetings, and the Board, the non-management Trustees and the Committees of the Board held a total of 57meetings, taking into account that certain meetings were jointly held by various committees. In 2007, eachTrustee attended at least 97% of the aggregate number of meetings of the Board of Trustees and meetings of allCommittees of the Board on which he or she served. All members of the Board of Trustees attended theAnnual Meeting of Shareholders held on May 8, 2007. Our Trustees are expected to attend our annual meeting,but we do not have a formal policy addressing this subject.

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SELECTION OF TRUSTEES

As set forth in its charter, it is the responsibility of the Corporate Governance Committee to identifyindividuals qualified to become Trustees and to recommend to the Board a slate of trustee candidates to besubmitted to a vote of our shareholders at the Annual Meeting of Shareholders.

As provided in our Corporate Governance Guidelines, the Corporate Governance Committee seeksnominees with the following qualifications:

Trustees should possess the highest personal and professional ethics, integrity and values, andbe committed to representing the long-term interests of the shareholders. They must also havean inquisitive and objective perspective, practical wisdom and mature judgment. The Boardshould represent diverse experience at policy-making levels in business, government,education, community and charitable organizations as well as areas that are relevant to ourbusiness activities. The Corporate Governance Committee also seeks diversity in gender,ethnicity and personal background when considering trustee candidates.

Applying these criteria, the Corporate Governance Committee considers trustee candidates suggestedby its members as well as by management and shareholders. The Committee has from time to time retained theservices of a third party executive search firm to assist it in identifying and evaluating such individuals.

Shareholders wishing to provide information concerning potential candidates for membership on theBoard of Trustees may address such information, in writing, to the Secretary of the Company at the mailingaddress set forth on page 6 of this Proxy Statement. The communication must identify the writer as ashareholder of Northeast Utilities and provide sufficient detail for the Corporate Governance Committee toconsider the nominee’s qualifications.

COMMUNICATIONS FROM SHAREHOLDERS AND OTHER INTERESTED PARTIES

Interested parties, including shareholders, who desire to communicate directly with the Board ofTrustees, the non-management Trustees as a group, or individual Trustees, including the Lead Trustee,Dr. Kennan, should send written communications in care of our Secretary at the mailing address set forth onpage 6 of this Proxy Statement. The Secretary will review each communication and forward allcommunications that properly identify the sender to the intended recipient or recipients.

THE CODE OF ETHICS AND THE STANDARDS OF BUSINESS CONDUCT

We have adopted a Code of Ethics for Senior Financial Officers (Chief Executive Officer, ChiefFinancial Officer and Controller) and a Standards of Business Conduct which is applicable to all of theTrustees, directors, officers, employees, contractors and agents of Northeast Utilities and its subsidiaries. TheCode of Ethics is available on our website at www.nu.com/investors/corporate_gov/code_ethics.asp and ourStandards of Business Conduct are available on our website at www.nu.com/investors/corporate_gov/NU_SBC_2007.pdf. You may obtain a printed copy of the Code of Ethics and the Standards of BusinessConduct, without charge, by contacting our Assistant Secretary at the address set forth on page 6 of this ProxyStatement. Any amendments to or waivers under the Code of Ethics or the Standards of Business Conduct willbe posted to our website at www.nu.com/investors/corporate_gov/default.asp.

TRUSTEE INDEPENDENCE

We have adopted Corporate Governance Guidelines incorporating independence standards that meetthe listing standards of the New York Stock Exchange. In addition, we have adopted an additional standardunder which a charitable relationship will not be considered to be a material relationship that would impair aTrustee’s independence if a Trustee serves as an officer or director of a charitable organization, and our

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discretionary charitable contributions to the organization, in the aggregate, do not exceed the greater of:(a) $200,000; or (b) two percent of the organization’s total annual charitable receipts or latest publiclyavailable operating budget. The Trustee Independence Guidelines are available on our website atwww.nu.com/investors/corporate_gov/trustee_independence.asp.

The Corporate Governance Committee of the Board of Trustees conducts an annual review of theindependence of the members of the Board and reports its findings to the full Board. Applying the CorporateGovernance Guidelines, the Committee, assisted by legal counsel and based on responses to questionnairescompleted by the Trustees, reviewed and considered relationships and transactions between Northeast Utilities,its affiliates and subsidiaries, on the one hand, and each nominee for Trustee, entities affiliated with him or her,and/or any member of his or her immediate family, on the other hand. The Committee also reviewed NortheastUtilities’ charitable donations to organizations where the nominees for Trustee or their immediate familymembers serve as officers or directors. Similarly, the Committee examined relationships and transactionsbetween each nominee for Trustee and (a) our senior management and (b) our independent auditors. TheCommittee determined that none of these relationships were material to the nominees for Trustee or likely toimpair the independence of any of the nominees for Trustee.

The Board of Trustees separately considered that Northeast Utilities and its subsidiaries in theordinary course of business have during the last three years sold products and services to, and/or purchasedproducts and services from, companies at which some of the nominees for Trustee were directors or, in thecase of Messrs. Booth, Cloud and Patricelli, executive officers, during 2007. In each case, the amounts paid toor received from these companies in each of the last three years did not exceed the two percent of total revenuethreshold in the Corporate Governance Guidelines. The Board determined that none of the relationships itconsidered were material to the nominees for Trustee or likely to impair the independence of any of thenominees for Trustee.

As a result of this review, based on the recommendation of the Corporate Governance Committee, onFebruary 12, 2008, the Board of Trustees affirmatively determined that all of the nominees for election asTrustee at the Annual Meeting, with the exception of Mr. Shivery, our President and Chief Executive Officer,satisfied the independence criteria (including the enhanced criteria with respect to members of the AuditCommittee) set forth in the current listing standards and rules of the New York Stock Exchange and Securitiesand Exchange Commission and under our Corporate Governance Guidelines.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Board of Trustees adopted a Related Party Transactions Policy on December 11, 2007. The Policyis administered by the Corporate Governance Committee. The Policy generally defines a “Related PartyTransaction” as any transaction or series of transactions in which (i) Northeast Utilities or a subsidiary is aparticipant, (ii) the aggregate amount involved exceeds $120,000 and (iii) any “Related Party” has a direct orindirect material interest. A “Related Party” is defined as any Trustee or nominee for Trustee, any executiveofficer, any shareholder owning more than 5% of our total outstanding shares, and any immediate familymember of any such person. Management submits to the Corporate Governance Committee for considerationany Related Party Transaction into which we propose to enter. The Corporate Governance Committeerecommends to the Board of Trustees to approve only those transactions that are in our best interests. RelatedParty Transactions are considered in light of the requirements set forth in our Standards of Business Conduct,including the Conflicts of Interest Policy, and our Code of Ethics for Senior Financial Officers. If managementcauses us to enter into a Related Party Transaction prior to approval by the Committee, the transaction will besubject to ratification by the Board of Trustees. If the Board determines not to ratify the transaction, thenmanagement will make all reasonable efforts to cancel or annul such transaction.

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COMMON SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table provides, as of March 1, 2008, information as to persons who are known to us tobeneficially own more than five percent of the common shares of Northeast Utilities. We do not have any otherclass of voting securities.

Name and Address of Beneficial OwnerAmount and Nature ofBeneficial Ownership Percent of Class

Lord, Abbett & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90 Hudson Street, 11th FloorJersey City, NJ 07302

10,891,828 (1) 7.0%

(1) Pursuant to a Statement on Schedule 13G/A filed with the Securities and Exchange Commission onFebruary 14, 2008, Lord, Abbett & Co. has the sole power to vote or direct the vote of 10,891,828common shares and the sole power to dispose or direct the disposition of 10,891,828 common shares.

COMMON SHARE OWNERSHIP OF TRUSTEES AND MANAGEMENT

The table below shows the number of our common shares beneficially owned as of March 1, 2008 byeach of our Trustees, one nominee for election as Trustee, and each executive officer named in the SummaryCompensation Table, as well as the number of common shares beneficially owned by all of our Trustees, thenominee and the executive officers as a group. Trustees and executive officers are subject to share ownershipguidelines that are described in greater detail elsewhere in this Proxy Statement.

Amount and Nature of Beneficial Ownership (1)

Name Shares Options (2) Total

Percentof

ClassRestrictedShare Units (3)

Richard H. Booth . . . . . . . . . . . 1,000 5,000 6,000 * 21,248Gregory B. Butler . . . . . . . . . . . 27,633 (4)(5)(6) 0 27,633 * 43,172Cotton M. Cleveland . . . . . . . . 7,732 12,500 20,232 * 19,262Sanford Cloud, Jr. . . . . . . . . . . . 22,044 0 22,044 * 9,018John S. Clarkeson . . . . . . . . . . . 0 0 0 * 0James F. Cordes . . . . . . . . . . . . 11,148 5,000 16,148 * 14,499E. Gail de Planque . . . . . . . . . . 18,032 7,500 25,532 * 6,396John G. Graham . . . . . . . . . . . . 600 0 600 * 22,621Cheryl W. Grisé . . . . . . . . . . . . 74,330 (5)(7)(8) 0 74,330 * 1,901Elizabeth T. Kennan . . . . . . . . . 4,638 0 4,638 * 21,694Jean M. LaVecchia . . . . . . . . . . 9,572 (5) 22,900 32,472 * 17,607Kenneth R. Leibler . . . . . . . . . . 3,832 0 3,832 * 3,775David R. McHale . . . . . . . . . . . 13,092 (5)(6)(7) 0 13,092 * 42,107Leon J. Olivier . . . . . . . . . . . . . 18,205 (5) 0 18,205 * 45,199Robert E. Patricelli . . . . . . . . . . 28,337 12,500 40,837 * 3,000Charles W. Shivery . . . . . . . . . 47,068 (5)(9) 29,024 76,092 * 312,442John F. Swope . . . . . . . . . . . . . 9,861 12,500 22,361 * 18,259

All Trustees and ExecutiveOfficers as a Group(20 persons) . . . . . . . . . . . . . 304,810 106,924 411,734 * 629,776

* Less than 1% of common shares outstanding.

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(1) The persons named in the table have sole voting and investment power with respect to all sharesbeneficially owned by each of them, except as noted below.

(2) Reflects common shares issuable upon exercise of outstanding stock options exercisable within the60-day period after March 1, 2008

(3) Includes unissued common shares consisting of restricted share units, deferred restricted share unitsand/or deferred shares, including dividend equivalents, as to which none of the individuals has votingor investment power. Also includes phantom common shares, representing employer matchingcontributions distributable only in cash, held by executive officers (except for Mr. McHale) whoparticipate in our Deferred Compensation Plan for Executives. Accordingly, these securities have beenexcluded from the “Total” column.

(4) Includes 24,850 shares owned jointly by Mr. Butler and his wife with whom he shares voting andinvestment power.

(5) Includes common shares held in the 401k Plan for the Employee Stock Ownership Plan account overwhich the holder has sole voting and no investment power (Mr. Butler: 2,388 shares; Mrs. Grisé:3,967 shares; Ms. LaVecchia: 1,790 shares; Mr. McHale: 3,014 shares; Mr. Olivier: 1,150 shares; andMr. Shivery: 1,304 shares).

(6) Includes common shares held in a 401k Plan NU Common Shares Fund over which the holder hassole voting and no investment power (Mr. Butler: 395 shares and Mr. McHale: 1,445 shares).

(7) Includes common shares held in the 401k Plan TRAESOP/PAYSOP account over which the holderhas sole voting and no investment power (Mrs. Grisé: 778 shares and Mr. McHale: 100 shares).

(8) Includes 265 shares held by Mrs. Grisé’s husband as custodian for their children. Mrs. Grisé and herhusband share voting and investment power with respect to these 265 shares. Mrs. Grisé retired onJuly 1, 2007.

(9) Includes 1,500 shares owned jointly by Mr. Shivery and his wife with whom he shares voting andinvestment power.

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COMPENSATION DISCUSSION AND ANALYSIS

OVERALL OBJECTIVES OF EXECUTIVE COMPENSATION PROGRAM

The fundamental objective of our Executive Compensation Program is to motivate executives and keyemployees to support our strategy of investing in and operating businesses that benefit customers, employees,and shareholders. As a holding company for several regulated utilities, we are also responsible to our franchisecustomers to provide energy services reliably, safely, with respect for the environment and our employees, andat a reasonable cost.

The Executive Compensation Program supports its fundamental objective through the followingdesign principles:

Š Attract and retain key executives by providing total compensation competitive with that of otherexecutives employed by companies of similar size and complexity. The program relies oncompensation data obtained from consultants’ surveys of companies and from a customized peergroup to ensure that compensation opportunities are competitive and capable of attracting andretaining executives with the experience and talent required to achieve our strategic objectives. As wecontinue to grow and improve our transmission, distribution, and regulated generation systems, havingthe right talent will be critical.

Š Establish performance-based compensation that balances rewards for short-term and long-termbusiness results. The program motivates executives to run the business well in the short term, whileexecuting the long-term business plan to benefit both our customers and shareholders. The programaims to strike a balance between the short- and long-term programs so that they work in tandem. Italso ensures that long-term objectives are not sacrificed to achieve short-term goals or vice versa.

Incentive plan performance criteria are based on a combination of financial, operational, stewardship,and strategic goals that are essential to the achievement of our business strategies. This linkage tocritical goals helps to align executives with our key stakeholders—customers, employees, andshareholders. The long-term program also compares performance relative to a group of comparableutility companies.

Š Reward corporate and individual performance. Overall compensation has many metrics based oncorporate performance but is also highly differentiated based on individual performance. The annualincentive program rewards both team performance (measured by adjusted net income) and individualperformance (including individualized financial, operational, stewardship and strategic metrics).Long-term incentives are composed of a performance cash program and restricted share units (RSUs).The performance cash program pays out based on the achievement of corporate goals (cumulative netincome, average return on equity, average credit rating and relative total shareholder return). The sizeof RSU grants reflects corporate performance during the preceding fiscal year as well as individualperformance and contribution, but the ultimate value of the RSUs is based on corporate totalshareholder return.

Š Encourage long-term commitment to the Company. Utility companies provide a public service andhave a long-term commitment to ensure that customers receive reliable service day after day. Meetingthis commitment requires specialized skills and institutional knowledge that are learned over timethrough local industry experience. These skills include familiarity with the regions and communitiesthat we serve, government regulations, and long-term energy policies. In addition, utility companiesrely on long-term capital investments to serve their customers.

As a result, public utilities benefit from long-service employees. We have structured our executivecompensation programs to build long-term commitment as well as shareholder alignment. Providingcompetitive compensation opportunities and offering programs such as RSUs and supplemental

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retirement benefits that vest and increase in value over time encourage long-term employment.Executive share ownership guidelines are another program component intended to build long-termshareholder alignment and commitment.

The executive officers listed in the Summary Compensation Table in this Proxy Statement whosecompensation is discussed in this CD&A are referred to as the “Named Executive Officers” or “NEOs.” For2007, our Named Executive Officers are:

Š Charles W. Shivery, Chairman of the Board, President and Chief Executive Officer

Š David R. McHale, Senior Vice President and Chief Financial Officer

Š Leon J. Olivier, Executive Vice President-Operations

Š Gregory B. Butler, Senior Vice President and General Counsel

Š Jean M. LaVecchia, Vice President-Human Resources, Northeast Utilities Service Company

Š Cheryl W. Grisé, Former Executive Vice President

ELEMENTS OF 2007 COMPENSATION

Set forth below is a brief description and the objective of each material element and the additionalbenefits of our executive compensation program:

CompensationElement Description Objective

Base Salary Fixed compensation

Usually increased annually during the firstquarter based on individual performance,competitive market levels, strategicimportance of the role and experience in theposition

Compensate officers for fulfilling their basicjob responsibilities

Provide base pay commensurate with themedian salaries paid to executive officersholding comparable positions in other utilitycompanies and companies in generalindustry

Aid in attracting and retaining qualifiedpersonnel

Annual IncentiveProgram

Variable compensation based onperformance against pre-established annualteam and individual goals that is paid in cashin the first quarter following the end of theprogram year

Promote the achievement of annualperformance objectives that representbusiness success for the Company, theexecutive, and his or her business unit orfunction

Long-TermIncentive Program

Variable compensation consisting of one-half RSUs and one-half performance cash(see below)

▪ Restricted shareunits (RSUs)

Common share units, which vest over athree-year period, granted based oncorporate performance and individualperformance and contribution

Align executive and shareholder intereststhrough share performance and shareownership

Encourage a long-term commitment to theCompany

▪ PerformanceCash Program

Long-term cash incentive that rewardsindividuals for corporate performance over athree-year period based on achieving pre-established levels of:• Cumulative net income• Average return on equity

Reward performance on key corporatepriorities that are also key drivers of totalshareholder return performanceEncourage long-term thinking andcommitment to the Company

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CompensationElement Description Objective

Š Average credit ratingŠ Total shareholder return relative to a

group of comparable utility companies

SupplementalBenefits

Supplemental Executive Retirement Plan,Nonqualified Deferred Compensation, andPerquisites

Supplemental benefits intended to help usattract and retain executive officers criticalto our success by reflecting competitivepractices

▪ SupplementalExecutiveRetirement Plan(SupplementalPlan)

Non-qualified pension plan, providingadditional retirement income to officersbeyond payments provided in our standarddefined benefit retirement plan, consistingof:

Š A defined benefit “make-whole” plan.Š A supplemental “target” benefit

(certain senior vice presidents andabove only)

Exempt employees, including executives,hired after 2005 are ineligible for thesebenefits

Compensate for Internal Revenue Codelimits on qualified plans

Aid in retention of executives and enhancelong-term commitment to the Company

▪ OtherNonqualifiedDeferredCompensation(Deferral Plan)

Opportunity to defer base salary and annualincentives, using the same investmentvehicles as the NU qualified 401(k) plan,and receive matching contributionsotherwise capped by Internal Revenue Codelimits on qualified plans

Each year’s matching contribution vestsafter three years or at retirement

For executives hired after 2005 who areineligible to participate in our definedbenefit pension plan, we make contributionsof 2.5%, 4.5% and 6.5%, as applicable basedon the relevant bracket for the sum of theofficer’s age and years of service, on cashcompensation that would otherwise becapped by Internal Revenue Code limits onqualified plans

Aid executives in tax planning by allowingthem to defer taxes on certain compensation

Compensate for Internal Revenue Codelimits on qualified plans

Provide a competitive benefitAid in retention and enhance long-termcommitment to the Company

▪ Perquisites Financial planning and tax preparationreimbursement benefit

Executive physical examinationreimbursement plan

Other perquisites including reimbursementof spousal travel expenses for businesspurposes

Encourage use of a professional to preparetax returns and maximize value ofcompensation

Encourage executives to undergo regularhealth checks to reduce the risk of losingcritical employees

Discretionary benefits intended to help ourexecutive officers be more productive andefficient

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CompensationElement Description Objective

EmploymentAgreements

Employment agreements with certain of ourNamed Executive Officers provide benefitsand payments upon involuntary terminationand termination following a change ofcontrol. Mr. Olivier and Ms. LaVecchiaparticipate in a “Special Severance Program”that provides other benefits and paymentsupon termination of employment resultingfrom a change-in-control

Meet competitive expectation ofemployment

Help focus executive on shareholderinterests

Provide income protection in the event ofinvoluntary loss of employment

MIX OF COMPENSATION ELEMENTS

We strive to provide executive officers with base salary, annual incentive compensation and long-termincentive compensation opportunities based on performance at or above the market median over time. Weestablish the market median as described under the caption entitled Market Analysis, below. As a result, theannual and long-term incentive target percentages for our CEO and the other executive officers listed in theSummary Compensation Table are approximately equal to competitive median incentives.

With respect to incentive compensation, the Compensation Committee believes it is important tobalance short-term goals, such as generating earnings per share, with longer term goals, such as long-termvalue creation and maintaining a strong balance sheet. As our executive officers are promoted to more seniorpositions, they assume increased responsibility for implementing our long-term business plans and strategies,and a greater proportion of their total compensation is based on performance with a long-term focus.Historically, long-term incentive compensation has been weighted more significantly than short-termincentives at target, reflecting the longer-term nature of our business plans. Accordingly, as depicted in thetable below, the long-term incentive compensation targets of each of the NEOs, as percentages of base salary,are slightly higher than the median targets reflected in the utility and general industry survey data that we useto analyze executive compensation. As a result, short-term incentive compensation is generally lower. Thesurvey data for long-term incentive compensation is based on the present value of actual long-term incentivegrants. We discuss this survey data in greater detail below under the caption entitled Market Analysis.

The Compensation Committee determines total compensation for each executive officer based on therelative authority, duties and responsibilities of each office. Our CEO’s responsibilities for the daily operationsand management of the Northeast Utilities System companies are significantly greater than the duties andresponsibilities of our other executive officers. As a result, our CEO’s compensation is significantly higherthan the compensation of our other executive officers. We regularly review market compensation data forexecutive officer positions similar to those held by our executive officers, including our CEO, and this marketdata continues to indicate that chief executive officers are typically paid significantly more than otherexecutive officers. For 2007, target annual incentive and long-term incentive compensation opportunities forour CEO were 100% and 300% of base salary, respectively. For the remaining NEOs, target annual incentivecompensation opportunities ranged from 45% to 65% of base salary and target long-term incentivecompensation opportunities ranged from 85% to 150% of base salary. Mr. Olivier’s long-term incentivecompensation target was fixed at 125% of his base salary, which is below a target of 150% of base salarytypically provided to executive officers at his level, because his total compensation includes a specialretirement benefit. Mrs. Grisé, who retired effective July 1, 2007, did not participate in the 2007 – 2009 Long-Term Incentive Program.

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The following table sets forth the contribution to 2007 Total Direct Compensation (TDC) of eachelement of compensation, at target, reflected as a percentage of TDC, for each Named Executive Officer.Annual incentive awards and performance cash awards under the long-term incentive program wereperformance based and, accordingly, were at risk.

Percentage of TDC at TargetPerformance Based (1)

Long-Term Incentives (2)

Named Executive OfficerBase

SalaryAnnual

IncentivePerformance

Cash RSUs (3) TDC

Charles W. Shivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20% 20% 30% 30% 100%

David R. McHale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32% 20% 24% 24% 100%

Leon J. Olivier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34% 22% 22% 22% 100%

Gregory B. Butler . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32% 20% 24% 24% 100%

Jean M. LaVecchia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44% 20% 18% 18% 100%

Cheryl W. Grisé (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61% 39% — — 100%

NEO Average, Excluding CEO . . . . . . . . . . . . . . . . . . . . . . . . . 40% 24% 18% 18% 100%

(1) The annual incentive compensation element and the long-term incentive compensation element are performance-based.

(2) Long-term incentive compensation at target consists of equal proportions of performance cash awards and RSUs.(3) RSUs are granted based on annual corporate and individual performance, but vest over three years contingent

upon continued employment. The percentages reflect the target value of the RSUs on the date of grant.(4) Mrs. Grisé retired on July 1, 2007.

MARKET ANALYSIS

The Compensation Committee strives to provide our executive officers with compensationopportunities over time at or above the median compensation levels for executive officers of companiescomparable to us. The Committee determined executive officer TDC levels in two steps. First, the Committeedetermined the “market” values of executive officer compensation elements (e.g., base salaries, annualincentives and long-term incentives) as well as total compensation using compensation data obtained fromother companies. The Committee reviewed compensation data obtained from two sources: (i) utility andgeneral industry survey data and (ii) customized peer group data. The Committee then reviewed thecompensation elements for each executive officer with respect to the median of these market values, andconsidered individual performance, experience and internal pay equity to determine the amount, if any, bywhich the various compensation elements should exceed the median market values. Significantly, theCommittee has not made a commitment to compensate our executive officers through a firm and directconnection between the compensation paid by us and the compensation paid by any of the companies fromwhich the utility and general industry survey data and the customized peer group data was obtained.

Set forth below is a description of the sources of the compensation data used by the CompensationCommittee:

Š Utility and general industry survey data. The Committee analyzed compensation informationobtained from surveys of diverse groups of utility and general industry companies that represent ourmarket for executive officer talent. The Committee used the utility and general industry survey data todetermine base salaries and incentive opportunities. The compensation consultant reviewed subsets ofsurvey data applicable to utility companies correlated to reflect entities similar in size to us. Then theCommittee compared utility-specific executive officer positions, including our Executive VicePresident – Operations, to utility-specific market values. For executive officer positions that have

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counterparts in general industry, including our CEO; Senior Vice President & Chief Financial Officer;and Senior Vice President & General Counsel, the Committee averaged general industry comparisonswith utility industry comparisons weighted equally.

Š Customized peer group data. The Committee also evaluated compensation data obtained fromreviews of proxy statements from a customized group of peer utility companies consisting of:(i) utilities that are substantially regulated with annual revenues that ranged from $2.5 billion to$12 billion with median annual revenues of $5.6 billion; and (ii) utilities that are less regulated andcloser in size to Northeast Utilities, with annual revenues that ranged from $3 billion to $7 billion.Although we do not consider utilities that are less regulated to be direct performance peers, thesecompanies represent potential sources of talent. The Committee considered data only for thoseexecutive officer positions where there is a title match, e.g., the CEO, Chief Financial Officer, andGeneral Counsel. For 2007, this group consisted of the following 22 companies:

Allegheny Energy, Inc. Great Plains Energy Incorporated PPL CorporationAlliant Energy Corporation NiSource Inc. Progress Energy, Inc.Ameren Corporation NSTAR Puget Energy, Inc.CenterPoint Energy, Inc. OGE Energy Corp. SCANA CorporationCMS Energy Corporation PG&E Corporation Sierra Pacific ResourcesConsolidated Edison, Inc. Pepco Holdings, Inc. TECO Energy, Inc.Energy East Corporation Pinnacle West Capital Corporation Wisconsin Energy Corporation

Xcel Energy Inc.

The Committee used compensation data obtained from these companies for insights into incentivecompensation design practices and compensation levels, although no specific actions were taken in 2007directly as a result of this data. In 2007, the Committee also used a subset of this group for performancecomparisons under the performance cash program as described below under the caption entitled 2007 – 2009Long-Term Incentive Program. The Committee periodically adjusts the target percentages of annual and long-term incentives based on the survey data to ensure that they continue to represent market median levels.Adjustments are made gradually over time to avoid radical changes.

The Compensation Committee also sets supplemental benefits at levels that provide market-basedcompensation opportunities to the executive officers. Compensation includes perquisites to the extent theyserve business purposes. The Committee periodically reviews the general market for supplemental benefits andperquisites using utility and general industry survey data, sometimes including data obtained from companiesin the customized peer group. Benefits are adjusted occasionally to maintain market parity. When the markettrend for supplemental benefits reflects a general reduction, (e.g., the elimination of defined benefit pensionplans), the Committee has reduced these benefits only for newly hired officers. The Committee reviewed oursupplemental retirement practices most recently in 2005 and 2006, as described in more detail below under thecaption entitled Supplemental Benefits.

BASE SALARY

The Compensation Committee reviews executive officers’ base salaries annually. The Committeeconsiders the following specific factors when setting or adjusting base salaries:

Š Annual individual performance appraisals

Š Market pay movement across industries (determined through market analysis)

Š Targeted market pay positioning for each executive officer

Š Individual experience and years of service

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Š Changes in corporate focus with respect to strategic importance of a position

Š Internal equity

Individuals who are performing well in strategic positions are likely to have their base salariesincreased more significantly than other individuals. From time-to-time, weak corporate performance hascaused salary increases to be postponed, but the Committee prefers to reflect subpar corporate performancethrough the variable pay components.

Based on these considerations, the Compensation Committee acting jointly with the CorporateGovernance Committee recommended to the Board of Trustees a salary increase for our CEO of 6.4%, whichwas approved by the Board. Mr. Shivery’s base salary was increased to the competitive median to recognizehis level of contribution in the CEO role. The Compensation Committee also approved base salary increasesfor the other NEOs in 2007 as follows: Mr. McHale: 20.0%; Mr. Olivier: 14.7%; Mr. Butler: 7.0%; andMs. LaVecchia: 7.0%. The Compensation Committee approved more significant base salary increases forMessrs. Olivier and McHale so that the base salary of each of them approached the median base salary for theirrespective positions. Mr. Olivier’s salary increase was primarily related to his promotion to Executive VicePresident, Operations in early 2007. Mr. McHale’s salary increase was primarily based on his increasedexperience and individual performance during 2006. Mr. Butler’s increase recognized increasing competitivepay levels for top legal professionals and his responsibilities in addition to oversight of the legal function.Ms. LaVecchia’s increase brought her base salary closer to median, and Mrs. Grisé did not receive a basesalary increase for 2007 because she had previously announced her plans to retire in 2007.

INCENTIVE COMPENSATION

The annual incentive program and the long-term incentive program are provided under the NortheastUtilities Incentive Plan, which was approved by our shareholders at the 2007 Annual Meeting of Shareholders.The annual incentive program provides cash compensation intended to reward performance under our annualoperating plans. The long-term incentive program is designed to reward demonstrated performance andleadership, motivate future superior performance, align the interests of the executive officers with those of ourshareholders and retain the executive officers during the term of awards. Awards under the long-term incentiveprogram consist of two elements of compensation, RSUs and performance cash. The Compensation Committeeselected RSUs as the equity component of long-term awards because utility companies create value forshareholders through the payment of periodic dividends as well as through share price appreciation. Theannual and long-term programs are intended to work in tandem so that achievement of our annual goals leadsus towards attainment of our long-term financial goals.

Incentive awards are based on objective financial performance goals established by the CompensationCommittee with the advice of the Finance Committee. The Compensation Committee sets the performancegoals annually for new annual incentive and long-term incentive program performance periods, depending onour business focus for the then-current year and the long-term strategic plan. The Compensation Committeehas modified the performance goals more significantly in recent years in connection with our increased focuson our regulated utility businesses.

2007 ANNUAL INCENTIVE PROGRAM

The 2007 Annual Incentive Program consisted of a team goal plus individual goals for each NEO. TheCompensation Committee set the annual incentive compensation targets for 2007 at 100% of base salary forour CEO and at 45% to 65% of base salary for the other NEOs. The annual incentive compensation targets areused as guidelines for the determination of annual incentive payments, but actual annual incentive paymentsmay vary significantly from these targets, depending on individual and corporate performance. Actual annualincentive payments may equal up to two times target if we achieve superior financial and operational results.

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The opportunity to earn up to two times the incentive target reflects the Compensation Committee’s belief thatexecutive officers have significant ability to affect performance outcomes. However, we do not pay annualincentive awards if minimum levels of financial performance are not met.

If our earnings were to be restated as a result of noncompliance with accounting rules caused by fraudor misconduct, the Sarbanes-Oxley Act of 2002 would require our CEO and our Chief Financial Officer toreimburse us for certain incentive compensation received by each of them. To the extent that reimbursementwere not required under Sarbanes-Oxley, our Incentive Plan would require any employee whose misconduct orfraud caused such restatement, as determined by the Board of Trustees, to reimburse us for any incentivecompensation received by him or her. To date, there have been no restatements to which either the Sarbanes-Oxley reimbursement provisions or the Incentive Plan reimbursement provisions would apply.

2007 Team Goal

The objective of the 2007 Annual Incentive Program team goal for the NEOs was to achieve anadjusted net income (ANI) target established by the Compensation Committee. ANI is defined as consolidatedNortheast Utilities net income adjusted to exclude the effect of certain nonrecurring income and expense itemsor events. The Committee uses ANI because it believes that ANI serves as an indicator of ongoing operatingperformance. The minimum payout under the team goal was set at 50% of target and would occur if actualANI was at least 90% of the ANI target. The maximum payout under the team goal was set at 200% of targetand would occur if actual ANI was at least 10% above the ANI target. We would pay annual incentivecompensation related to individual goals only if actual ANI was at least 80% of the ANI target.

For 2007, the Compensation Committee established the ANI target at $219.4 million. The ANI targetreflects the midpoint of the range of internal ANI estimates calculated at the beginning of the year. The ANIthresholds for the individual and team goals appear below (dollars in millions):

Threshold ForIndividual Goals

(20% belowANI Goal)

MinimumTeam Goal(10% belowANI Goal) 2007 ANI Goal

MaximumTeam Goal(10% aboveANI Goal)

Actual2007 ANI

$ 175.5 $197.5 $219.4 $241.3 $257.9

The Compensation Committee set the ANI threshold for achieving individual goals and the minimumand maximum team goals in its discretion based on the following factors:

Š An assessment of the potential volatility in results;

Š The degree of difficulty in achieving the ANI target; and

Š The minimum acceptable ANI.

At the time that the Compensation Committee established the performance goals for 2007, theCommittee also considered and agreed upon exclusions from ANI consisting of certain nonrecurring incomeand expense items or events that were either beyond the control of management generally or related to adecision by the Committee not to penalize executive officers for making correct strategic business decisions.The number of exclusions reflects the complexity of our business as we continue to increase our focus on ourregulated utility businesses. The Compensation Committee approved all final exclusions from ANI. In 2007,the income and expense items set forth below were excluded from ANI in 2007. The Net Adjustments to ANIdid not impact the achievement of the maximum team goal.

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Excludable Categories

Specific 2007Adjustments($ in millions)

Changes to net income as the result of accounting or tax law changes . . . . . . . . . . . . . . . . . . . . . . . $(12.8)

Unexpected costs related to nuclear decommissioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4

Unexpected costs related to environmental remediation at Holyoke Water Power Company . . . . . . —

Unbudgeted charitable contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.8)

Impairments on goodwill acquired before 2002 (more than five years prior to the beginning of thisprogram period) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Changes to net income resulting from any settlement of, or final Decision in, ongoing litigationwith Consolidated Edison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Mark-to-market impacts of agreements to which we or any of our Competitive subsidiaries areparties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.8)

Unusual Internal Revenue Service /regulatory decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Divestiture or discontinuance of a significant segment or component of our competitivebusinesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.4)

Net benefit to income from customer service integration project delay * . . . . . . . . . . . . . . . . . . . . . 6.4

Net Adjustments: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(13.0)

* Excluded from ANI at the discretion of the Compensation Committee.

2007 Individual Goals

The 2007 Annual Incentive Program individual goals included various financial, operational,stewardship, and strategic metrics that are drivers of overall corporate performance. The achievement ofindividual goals would result in an annual incentive payment only if actual ANI is at least 80% of the ANItarget. This ANI threshold satisfies the requirements of Section 162(m) of the Internal Revenue Code. Uponachieving this ANI threshold, the maximum payout is possible for individual goals for every participant.

The Committee acts in its discretion under Section 162(m) and related Internal Revenue Service rulesand regulations to ensure that incentive compensation payments are “qualified performance basedcompensation” not subject to the $1 million limitation on deductibility. The Compensation Committee actingjointly with the Corporate Governance Committee determines the CEO’s proposed annual incentive programpayment based on the extent to which individual and corporate goals have been achieved. The CompensationCommittee recommends to the Board of Trustees for approval the proposed award for the CEO. For theremaining NEOs, the CEO recommends annual incentive awards to the Compensation Committee for itsapproval. NEOs are eligible to receive up to two times the annual incentive compensation target for theindividual portion of the award.

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Goal Weightings for 2007

The following table sets forth the weighting of the annual incentive program team goal and individualgoals of each NEO’s compensation for 2007. These weightings reflect the Compensation Committee’s desireto balance individual accountability with teamwork across the organization. Individual goals collectively rangefrom 40% to 60% of the total annual incentive program target. Certain of our NEO’s individual performancegoals are subjective in nature and cannot be measured either by reference to existing financial metrics or byusing pre-determined mathematical formulas. The Committee believes that it is important to exercise judgmentand discretion when determining the extent to which each NEO satisfies subjective individual performancegoals. The Committee considers these goals along with several factors, including overall individualperformance, corporate performance, prior year compensation and the other factors discussed below.

Name andPrincipalPosition

Team GoalWeighting

IndividualGoal

Weighting Brief Description of Material Individual Goals

Charles W. Shivery

Chairman of theBoard, President,and ChiefExecutive Officer

60% 40% Ensure effective execution of the Company’s strategic plan and theoperating and capital plans (30% of individual goals).

Achieve successful outcomes in federal and state energy regulatorypolicy and ratemaking proceedings; develop comprehensivecommunications strategy regarding critical issues (20% of individualgoals).

Achieve progress in continued development and implementation ofenergy policy in New England (20% of individual goals).

Implement strategic planning organization to create decision makingframework to evaluate strategic options available to the Company(15% of individual goals).

Focus on workforce management and effective pay for performance;meet Company objectives for safety, diversity and the environment(15% of individual goals).

David R. McHale

Senior VicePresident andChief FinancialOfficer

60% 40% Strategic initiatives: Operational planning, risk management, andcapital allocation (25% of individual goals).

Business execution: Lead efforts in rate cases, regulatory strategy,energy policy, and corporate cost analysis and management (40% ofindividual goals).

Financial organization: Reorganize corporate finance function andrelated financial improvement initiatives (20% of individual goals).

Competitive business divestiture (15% of individual goals).

Leon J. Olivier

Executive VicePresident –Operations

40% 60% Manage the capital program budget (45% of individual goals).

Achieve significant progress in New England East-West Solution, ajoint project with National Grid designed to improve reliability andelectric transfer capability in Springfield, Massachusetts and centraland northeast Connecticut (15% of individual goals).

Achieve successful outcomes in federal and state energy regulatorypolicy and ratemaking proceedings (20% of individual goals).

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Name andPrincipalPosition

TeamGoal

Weighting

IndividualGoal

Weighting Brief Description of Material Individual Goals

Fully integrate new computer system for managing work requests,design, scheduling, construction and closeout processes (10% ofindividual goals).

Comply with federal and state energy regulatory requirements (10%of individual goals).

Gregory B. Butler

Senior VicePresident andGeneral Counsel

50% 50% Achieve successful outcomes in federal and state energy regulatorypolicy and ratemaking proceedings (40% of individual goals).

Manage his areas of responsibility (45% of individual goals).

Position NU to assume a leadership role in State and Federalregulatory matters; develop and implement New England energypolicy (15% of individual goals).

Jean M. LaVecchia

Vice President –Human Resources

50% 50% Workforce planning, to include assessments of short-term and long-term needs, development of multi-year recruiting, retention anddevelopment plans (25% of individual goals).

Lead talent management process, implement integrated talentmanagement system (20% of individual goals).

Develop and implement development plans for new and transitioningdirectors and mid-level managers (20% of individual goals).

Develop Employer of Choice plan; implement Diversity andInclusion Plan (10% of individual goals).

Develop and conduct training on compliance and ethical behavior(10% of individual goals).

Develop comprehensive benefits plans for segments of employees(10% of individual goals).

Implement process for early identification of issues and trends toachieve top quartile safety performance (5% of individual goals).

Cheryl W. Grisé

Former ExecutiveOfficer

40% 60% Effectively transition from active role in management to advisoryrole in anticipation of retirement (100% of individual goals).

2007 Results

The 2007 actual ANI was $257.9 million, which exceeded the maximum ANI amount for the annualprogram team goal. As a result, a portion of the total annual incentive payment to each NEO was attributable toachieving the maximum team goal. In addition, the 2007 actual ANI exceeded the individual goal threshold.Accordingly, the balance of the annual incentive payment to each NEO was based on the extent to which eachNEO achieved his or her individual goals.

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CEO Annual Incentive Payment

The Compensation Committee and the Corporate Governance Committee assessed Mr. Shivery’sperformance on his individual goals described in the table above. Set forth below is a description of theCommittees’ assessment of Mr. Shivery’s performance against these goals:

Š Mr. Shivery’s execution of our long-term strategic plan as well as our operating and capital planswas above expectations. In the aggregate, major transmission projects were on or ahead ofschedule and at or below budget. Implementation of the $6 billion capital investment program ison track and has yielded increased earnings and improved reliability. In 2007, our transmissionbusiness very successfully completed a compliance audit conducted by the North AmericanElectric Reliability Corporation.

Š Overall customer satisfaction ratings improved for all but one business unit.

Š On balance, Mr. Shivery met expectations relative to rate-making and regulatory policyproceedings. Rate cases for Public Service Company of New Hampshire (PSNH) and Yankee GasServices Company were settled without significant issues, and the settlements allowed bothentities to meet their respective financial objectives. However, the disappointing outcome of theCL&P rate case was below our range of expected results. In addition, CL&P was challengedduring the year with poor responsiveness to customers’ concerns and issues. Senior managementhas since taken this issue as an opportunity to solidify CL&P’s commitment to meet itscustomers’ expectations. Under Mr. Shivery’s direction, management developed and implementeda multi-year communications strategy designed to communicate critical issues.

Š Mr. Shivery exceeded expectations with respect to our New England energy policy initiatives. Weare actively involved in addressing regional energy reliability and environmental issues throughMr. Shivery’s initiative and are making outstanding contributions in this area. In addition, wehave advanced the discussion regarding pursuit of potential energy solutions outside of ourgeographical region with industry leaders and policymakers. Mr. Shivery also co-chairs theEdison Electricity Institute (EEI) Energy Delivery Committee, which has helped frame EEIpositions around critical energy policy issues on a national and regional level.

Š Mr. Shivery met expectations relative to developing a longer-term strategic plan. He and hismanagement team have identified emerging strategic opportunities which they are pursuing andhave expanded their attention to enterprise risk management. In the third quarter, Mr. Shiverysuccessfully hired a new officer as Senior Vice President – Enterprise Planning to further developour thinking about our future positioning and strategic opportunities.

Š Mr. Shivery continued to emphasize aligning the Company’s culture to assure support of itsstrategic direction, performing above expectations in this goal area. Under Mr. Shivery’sdirection, workforce plans were completed throughout the Company and initiatives wereimplemented to address critical needs, including the introduction of business, financial andtechnical educational opportunities for our employees. Mr. Shivery and the management teamcontinued to improve safety, enhance diversity and effectively manage our environmentalresponsibilities.

The Compensation Committee and the Corporate Governance Committee jointly consideredMr. Shivery’s performance on all of the individual performance goals set forth above. Coupled with ouroverall corporate performance measured by ANI, the committee members applied judgment to determine theirrecommendation for Mr. Shivery’s annual incentive payment. In particular, the committees gave weight to thefinding that our total shareholder return in 2007 was in the top quartile of our performance peer group ofcompanies. Following a detailed review of these factors without Mr. Shivery present, the Board of Trusteesawarded Mr. Shivery an annual incentive payment of $1,683,360 for 2007, consisting of $1,184,770

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attributable to the achievement of 200% of the team goal and an additional $498,590 attributable toMr. Shivery’s performance of his individual goals. The Board of Trustees determined that this annual incentivepayment was consistent with Mr. Shivery’s above-expectations performance based on corporate, financial andindividual criteria established for 2007. This amount also reflected an increase from the annual incentivepayment received by Mr. Shivery for 2006, which the Board of Trustees believed was warranted in light of oursustained strong corporate performance in 2007. Mr. Shivery’s annual incentive payment exceeds that of theother NEOs because of his significantly greater duties and responsibilities as our CEO.

NEO Annual Incentive Payments

In addition to our corporate ANI goal described above, the Compensation Committee consideredindividual performance goals and other factors in determining the annual incentive payments for each of theother NEOs. These factors included the annual incentive payment recommendations made by our CEO withrespect to each of the NEOs and the scope of each NEO’s responsibilities, performance, and impact on orcontribution to our corporate success and growth. The annual incentives paid to each NEO as described belowinclude the maximum amount for the corporate ANI goal component.

The Compensation Committee determined that Mr. McHale and his organization made significantadvancements strengthening our enterprise risk management and financial organization capabilities andprocesses. Mr. McHale and his team successfully completed our capital financing objectives for 2007 despite adifficult fixed-income market in the second half of the year, and maintained the current credit ratings andrating agency outlooks on us and our four regulated utilities despite increased capital expenditure projections.In addition, Mr. McHale’s organization played a critical role in rate cases for three of our business units that, inaggregate, produced results that were within our anticipated range, although the outcome of the CL&P ratecase was below our range of expected results. Finally, Mr. McHale and his team were successful at reducingthe market risk of our competitive businesses while achieving above-budget net income. Based on hisdemonstrated leadership and this assessment of his successes, the Compensation Committee awardedMr. McHale an annual incentive payment of $487,620 for 2007.

The Compensation Committee determined that Mr. Olivier and his team successfully completedimportant liquefied natural gas storage, electric distribution, and electric transmission system projects and havemade excellent progress on the New England East West Solution (NEEWS) major electric transmission systemproject. These projects will help position us for the future and bring significant benefits to both customers andshareholders. In addition, Mr. Olivier’s team has improved system reliability. In 2007, our transmissionbusiness very successfully completed a compliance audit conducted by the North American Electric ReliabilityCorporation. Based on his demonstrated leadership and this assessment of his successes, but acknowledginghis shared responsibility for the CL&P rate case and customer service issues cited in the preceding descriptionof Mr. Shivery’s award, the Compensation Committee awarded Mr. Olivier an annual incentive payment of$452,226 for 2007.

The Compensation Committee determined that Mr. Butler’s team advanced our position on regionalenergy policy considerably in Connecticut, Massachusetts and New Hampshire, which will ultimately providebenefits to customers and shareholders. In addition, Mr. Butler’s team successfully communicated the need foradditional revenues for three of our companies, each of which conducted state regulatory ratemakingproceedings in 2007, although the outcome of the CL&P rate case was below our range of expected results.Based upon these successes, but acknowledging his shared responsibility for the CL&P rate case and customerservice issues cited in the preceding description of Mr. Shivery’s award, the Compensation Committeeawarded Mr. Butler an annual incentive payment of $390,700 for 2007.

The Compensation Committee determined that Ms. LaVecchia and her team implemented workforceplanning and development initiatives designed to meet critical organizational needs. She and her team alsoimplemented internal and external programs to help ensure that our future staffing needs will be met. Basedupon these successes and her demonstrated leadership within the company and our community, theCompensation Committee awarded Ms. LaVecchia an annual incentive payment of $198,740 for 2007.

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Although Mrs. Grisé retired during 2007, she was eligible to receive a prorated annual incentivepayment for 2007. The Compensation Committee determined that Mrs. Grisé was successful in assisting us inpreparing for an orderly transition following her retirement and awarded Mrs. Grisé an annual incentivepayment of $187,645 for 2007, representing an overall payout at target when adjusted for her term ofemployment during 2007.

2007 – 2009 LONG-TERM INCENTIVE PROGRAM

The Compensation Committee acting jointly with the Corporate Governance Committeerecommended to the Board of Trustees a long-term incentive target grant value for our CEO as a percentage ofbase salary on the date of grant, which recommendation was approved by the Board. The CompensationCommittee also approved long-term incentive target grant values for each of the other NEOs as a percentage ofbase salary on the date of grant. At target, each grant consisted of one-half RSUs and one-half performancecash, subject to adjustment by the Compensation Committee (except the Compensation Committee acts jointlywith the Corporate Governance Committee in recommending to the Board of Trustees adjustments to ourCEO’s targets), reflecting the Committee’s desire to balance total shareholder return with our corporatefinancial performance. In 2007, the Compensation Committee acting jointly with the Corporate GovernanceCommittee recommended to the Board of Trustees a long-term incentive compensation target for our CEO at300% of base salary, which the Board approved. The Compensation Committee established long-termincentive compensation targets at 85% to 150% of base salary for the remaining NEOs. Mr. Olivier’s long-term incentive compensation target was fixed at 125% of his base salary, which is below a target of 150% ofbase salary typically provided to executive officers at his level, because his compensation includes a specialretirement benefit. Mrs. Grisé, who retired effective July 1, 2007, did not participate in the 2007 – 2009 Long-Term Incentive Program.

Restricted Share Units (RSUs)

Each RSU awarded under the long-term incentive program entitles the holder to receive one NUcommon share at the time of vesting. All RSUs awarded in 2007 will vest in equal annual installments overthree years. RSU holders are eligible to receive dividend equivalents on outstanding RSUs held by them to thesame extent that dividends are declared and paid on our common shares. Dividend equivalents are accountedfor as additional common shares that accrue and are distributed simultaneously with the common shares issuedupon vesting of the underlying RSUs.

At the beginning of each year, the Compensation Committee determines target RSU awards for eachparticipant in the long-term incentive program. Initially, the target RSU awards are equal to one-half of thelong-term incentive compensation target for each participant. RSU awards are based on a percentage of basesalary and measured in dollars. The aggregate dollar amount of the target RSU awards for all participantsconstitutes the target RSU Pool for that particular long-term incentive program. The Committee reserves theright to increase or decrease the target RSU Pool based on our financial performance during the precedingfiscal year. In its discretion, the Committee may also increase or decrease RSU awards for individualparticipants based on the contribution by the executive officer to our long-term strategic direction and theCommittee’s assessment of the need to motivate the executive officer’s future performance. The CompensationCommittee acting jointly with the Corporate Governance Committee recommends to the Board of Trustees thefinal RSU award for our CEO. Based on input from our CEO, the Compensation Committee determines thefinal RSU awards for each of the other NEOs. Increases or decreases to target RSU awards for our executiveofficers will increase or decrease their compensation as compared to the compensation of executive officers ofutilities listed in our customized peer group. Increases or decreases to individual target RSU awards will alsocorrespondingly increase or decrease the RSU pool.

All RSUs are granted on the date of the Committee meeting at which they are approved. RSU grantsare subsequently converted from dollars into NU common share equivalents by dividing the amount of eachaward by the average closing price for common shares during the last ten trading days in January in the year ofthe grant.

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In 2007, the Committee approved a final RSU Pool for executive officers consisting of $5,340,525,which represents 146.5% of target, based on our corporate performance during 2006 in connection with theincreased focus on our regulated utility businesses. The following RSU awards were approved, reflected as apercentage of target and in dollars, based on individual performance and contributions: Mr. Shivery: 175%($2,625,000); Mr. McHale: 150% ($506,250); Mr. Olivier: 150% ($445,313); Mr. Butler: 130% ($377,918);and Ms. LaVecchia: 130% ($153,209). The Committee did not grant RSU awards under the long-termincentive program to Mrs. Grisé, who retired effective July 1, 2007.

RSU Design Changes

RSUs granted under the 2004 long-term incentive compensation program vest in equal installments onthe grant-date anniversaries over four years. All RSUs granted under the 2005 and 2006 long-term incentivecompensation programs vest in equal installments on the grant-date anniversaries over three years. Pursuant tothe terms of the original RSU awards (except with respect to certain RSUs granted to our CEO), on eachvesting date, we distributed common shares to the RSU holders only with respect to one-half of the number ofRSUs that vested. We deferred the distribution of the remaining one-half of the common shares for anadditional four years. Because RSU holders are taxed only upon the receipt of the underlying common shares,taxes on such remaining one-half of the common shares were also deferred for an additional four years.Pursuant to an agreement with our CEO, we continue to defer the distribution of common shares upon thevesting of RSUs granted to him under the 2005, 2006 and 2007 programs until after he leaves the Company.Except for RSUs granted to our CEO, the 2007 long-term incentive program did not contain automaticdeferred distribution provisions.

In 2007, consistent with the adoption of share ownership guidelines (discussed below), theCompensation Committee amended the 2004, 2005 and 2006 long-term incentive compensation programs toeliminate the deferred distribution feature for executive officers, except for RSUs granted to our CEO underthe 2004 program. The Committee also permitted executive officers to elect to continue deferred distributionof common shares upon vesting of RSUs granted under these programs. Executive officers who did not elect tocontinue deferred distribution received all common shares for which distribution had been previously deferred(in respect of RSUs that had previously vested) on February 25, 2008. In the future, executive officers who didnot elect to continue deferred distribution will receive immediately all common shares distributable uponvesting of unvested RSUs, beginning with the February 25, 2008 vesting date. The elimination of the deferreddistribution feature also resulted in the elimination of the ability to defer taxes for an additional four years.

All of the NEOs elected to continue deferred distribution of common shares upon vesting of RSUsgranted under all of these programs except Mr. McHale, who elected to continue deferred distribution ofcommon shares only for RSUs granted under the 2005 and 2006 programs. As a result, on February 25, 2008,we distributed 1,083 common shares to Mr. McHale and withheld 465 common shares to satisfy income taxwithholding obligations in respect of previously vested RSUs granted under the 2004 long-term incentiveprogram.

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Share Ownership Guidelines

Effective in 2007, the Compensation Committee approved share ownership guidelines to emphasizethe significance of increased share ownership by certain of our executive officers. The Committeesubsequently reviewed the guidelines for these executive officers and determined that they remain reasonableand require no modification. The guidelines call for the CEO to own a minimum number of common sharesvalued at approximately six-times base salary and the executive officers to own a minimum number ofcommon shares valued at approximately two to three-times base salary. The most prevalent share ownershiplevel of CEOs of utilities listed in our customized peer group was valued at approximately five-times basesalary.

Executive OfficerOwnership Guidelines

(Number of Shares)

CEO . . . . . . . . . . . . . . . . . . . . . . . . . 200,000

EVPs / SVPs . . . . . . . . . . . . . . . . . . . 45,000

Subsidiary presidents andkey department heads . . . . . . . . . . . . 17,500

At the time the share ownership guidelines were implemented, the Committee required our executiveofficers to attain these ownership levels within five years. In 2007, the Committee amended the guidelines torequire newly-hired executive officers to attain the ownership levels within seven years. All of our NEOs arecurrently at, or close to, these levels. Common shares, whether held of record, in street name, or in individual401(k) accounts, and RSUs all satisfy the guidelines. Unexercised stock options do not count toward theownership guidelines.

Performance Cash Program

General

The Performance Cash Program is a performance-based component of our long-term incentiveprogram. Performance cash awards are equal to one-half of total individual long-term incentive awards attarget. A new three-year program commences every year. Payment under a program depends on the extent towhich we achieve goals in the four metrics described below during each year of the program. TheCompensation Committee determines the actual amounts payable, if any, only after the end of the final year inthe respective program.

Š Cumulative Adjusted Net Income, which is consolidated Northeast Utilities net income adjustedto exclude the effects of certain nonrecurring income and expense items or events (which wedefined as ANI under the annual incentive program) over the three years in a program.

Š Average adjusted ROE, which is the average of the annual return on equity for the three years in aprogram. The Committee adjusts average ROE on the same basis as cumulative adjusted netincome.

Š Average credit rating, which is the time-weighted average daily credit rating by the ratingagencies Standard & Poor’s, Moody’s, and Fitch. The metric is calculated by assigning numericalvalues to credit ratings (A or A2: 5; A- or A3: 4; BBB+ or Baa1: 3; BBB or Baa2: 2; and BBB- orBaa3: 1) so that a high numerical value represents a high credit rating. In addition to averagecredit rating objectives, the ratings by S&P and Moody’s must remain above investment grade.

Š Relative total shareholder return as compared to the return of the utility companies listed in theperformance peer group identified for each Performance Cash Program.

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The Committee weighs each of the four metrics equally, reflecting the Compensation Committee’sbelief that these areas are critical measurements of corporate success. The Committee measures the cumulativeadjusted net income, average adjusted ROE, and average credit rating because these metrics are directly relatedto our multi-year business plan in effect at the beginning of the three-year program. The Committee alsomeasures relative total shareholder return to emphasize to the plan participants the importance of achievingtotal shareholder returns at or above the median return for companies listed in the program performance peergroup. We are required to achieve a minimum level of performance under each metric before any amount ispayable with respect to that metric. If we achieve the minimum level of performance, then the resulting payoutwill equal 50% of the target. If we achieve the maximum level of performance, then the resulting payout willequal 150% of target. The Committee fixed the minimum opportunity at 50% of target and the maximumopportunity at 150% of target because the Committee believes this range is consistent with the ranges used bycompanies listed in the program performance peer group.

2005 – 2007 Performance Cash Program

The Compensation Committee approved the 2005 – 2007 Performance Cash Program in early 2005.Upon completion of our fiscal year ended 2007, the Committee determined that we achieved goals under eachof the four metrics during the three-year program and, accordingly, that awards under the program werepayable at an overall level of 130% of target. The table set forth below describes the goals under the 2005 –2007 program and our actual results during that period:

2005 – 2007 Program Goals

Goal Minimum Target Maximum Actual Result

Cumulative Adjusted Net Income ($ in millions) . . . . . . . . . . . . . . . . . . . $519.5 $611.2 $702.9 $693.8Average Adjusted ROE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3% 7.4% 8.5% 8.7%Average Credit Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 2.0 2.8 1.7Relative Total Shareholder Return (percentile) (1) . . . . . . . . . . . . . . . . . . 40th 60th 80th 91st

(1) The performance peer group for the 2005 – 2007 program included Northeast Utilities and thefollowing companies: Consolidated Edison, Inc., DTE Energy Company, Energy East Corporation,Great Plains Energy Incorporated, Integrys Energy Group, Inc., NiSource, Inc., NSTAR, PepcoHoldings, Inc., PPL Corporation, Wisconsin Energy Corporation and Xcel Energy Inc.

Based on our financial performance during the three-year performance period of the 2005 – 2007Performance Cash Program, the Committee approved the following payments: Mr. Shivery: $1,365,000;Mr. McHale: $268,190; Mr. Olivier: $325,000; Mr. Butler: $341,250; Ms. LaVecchia: $137,020; andMrs. Grisé: $434,958. The payments were determined pursuant to formulas set forth in the 2005 – 2007Performance Cash Program and were not subject to the discretion of the Compensation Committee.

2007 – 2009 Performance Cash Program

The Committee approved the 2007 – 2009 Performance Cash Program goals during early 2007. Noamounts have been paid under this program, and the Committee will not determine whether any amounts arepayable until the end of our 2009 fiscal year, which is the final year in the three-year program.

The 2007 – 2009 program also includes goals in four metrics: cumulative adjusted net income,average adjusted ROE, average credit rating, and relative total shareholder return. For the 2007 – 2009program, cumulative adjusted net income and average adjusted ROE exclude the effects of the followingnonrecurring income and expense items or events: accounting or tax law changes; unusual Internal RevenueService or regulatory issues; unexpected costs related to nuclear decommissioning; unexpected costs related to

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environmental remediation of the Holyoke Water Power Company; divestiture or discontinuance of a segmentor component of our business; mark-to-market impacts of agreements to which we or any of our competitivesubsidiaries are parties; unbudgeted charitable contributions; impairments on goodwill acquired before 2002(more than five years prior to the beginning of this program cycle); and the impact of any settlement of, orfinal decision in, ongoing litigation with Consolidated Edison, Inc.

The performance peer group for the 2007 – 2009 program includes Northeast Utilities and thefollowing companies: Allegheny Energy, Inc., Alliant Energy Corporation, Ameren Corporation, CenterPointEnergy, Inc., Consolidated Edison, Inc., Energy East Corporation, NiSource, Inc., NSTAR, Pepco Holdings,Inc., Pinnacle West Capital Corporation, Puget Energy, Inc., SCANA Corporation, Sierra Pacific Resources,Wisconsin Energy Corporation and Xcel Energy Inc.

SUPPLEMENTAL BENEFITS

We provide a variety of basic and supplemental benefits designed to assist us in attracting andretaining executive officers critical to our success by reflecting competitive practices. The CompensationCommittee endeavors to adhere to a high level of propriety in managing executive benefits and perquisites. Wedo not provide permanent lodging or personal entertainment for any executive officer or employee, and ourexecutive officers are eligible to participate in substantially the same health care and benefit programsavailable to our employees.

RETIREMENT BENEFITS

We provide retirement income benefits for employees, including executive officers, who commencedemployment before 2006 under the Northeast Utilities Service Company Retirement Plan (Retirement Plan)and, for officers, under the Supplemental Executive Retirement Plan for Officers of Northeast Utilities SystemCompanies (Supplemental Plan). Each plan is a defined benefit pension plan, which determines retirementbenefits based on years of service, age at retirement, and “plan compensation.” Plan compensation for theRetirement Plan, which is a qualified plan under the Internal Revenue Code, includes primarily base pay andnonofficer annual incentives up to the Internal Revenue Code limits for qualified plans. Beginning in 2006,newly-hired exempt employees, including executive officers, participate in an enhanced defined contributionretirement plan, called the K-Vantage benefit, instead of the Retirement Plan. Employees hired before 2006continue to participate in the Retirement Plan, except for those who elected to participate in the K-Vantagebenefit.

The Supplemental Plan adds to plan compensation: base pay over the Internal Revenue Code limits;deferred base salary; annual executive incentive program awards; and, for certain participants, long-termincentive program awards, as explained in the narrative accompanying the Pension Benefits Table.

The Supplemental Plan consists of two parts. The first part, called the make-whole benefit, reimbursesparticipants for benefits lost due to Internal Revenue Code limitations on benefits provided under theRetirement Plan. The second part, called the target benefit, is available to all NEOs except Mr. Olivier andMs. LaVecchia. The target benefit supplements the Retirement Plan and make-whole benefit under theSupplemental Plan so that, upon attaining at least 25 years of service, total retirement benefits from these planswill equal a target percentage of the final average compensation. To receive the target benefit, a participantmust remain employed by us or our subsidiaries at least until age 60, unless the Board of Trustees establishes alower age.

The value of the target benefit was reduced in 2005 to reflect changes in competitive practices, whichindicated general reductions in the prevalence of defined benefit plans and the value of special retirementbenefits to senior executives. Individuals who began serving as officers before February 2005 are eligible toreceive a target benefit with the target percentage fixed at 60%. Individuals who began serving as officers fromand after February 2005 are eligible to receive a target benefit with the target percentage fixed at 50%. As aresult, Messrs. Shivery and Butler have target benefits at 60% while Mr. McHale has a target benefit at 50%.

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Mr. Shivery’s employment agreement provides for a special total retirement benefit determined usingthe Supplemental Plan target benefit formula plus three additional years of company service. This benefit willbe reduced by two percent per year for each year Mr. Shivery retires before age 65. Upon retirement,Mr. Shivery will be eligible to receive the cash value of retirement health benefits. See the Pension BenefitsTable and the accompanying narrative for more details of these arrangements.

We entered into an employment agreement with Mr. Olivier that includes retirement benefits similarto the benefits provided by his previous employer. Accordingly, Mr. Olivier is entitled to receive separateretirement benefits in lieu of the Supplemental Plan benefits described above. Pursuant to his agreement,Mr. Olivier will receive a targeted pension value if he meets certain eligibility requirements. See the PensionBenefits Table and the accompanying narrative for more details of this arrangement. As discussed under thecaption entitled Mix of Compensation Elements above, Mr. Olivier’s long-term incentive plan targets andtermination benefits are less than those provided to other similarly situated officers because of these separateretirement benefits.

401K PLAN

We provide an opportunity for employees to save money for retirement on a tax-favored basis throughthe Northeast Utilities Service Company 401k Plan (401k Plan). The 401k Plan is a defined contribution planunder Section 401(k) of the Internal Revenue Code. Participants with at least six months of service receiveemployer matching contributions, not to exceed 3% of base compensation, one-third of which are in cashavailable for investment in various mutual fund alternatives and two-thirds of which are in the form ofcommon shares (ESOP shares).

The K-Vantage benefit provides for employer contributions to the 401k Plan in amounts between2.5% and 6.5% of plan compensation based on age and years of service. These contributions are in addition toemployer matching contributions. Executive officers hired beginning in 2006 also participate in a companionnonqualified K-Vantage benefit that provides defined contribution benefits above Internal Revenue Codelimits on qualified plans.

NONQUALIFIED DEFERRED COMPENSATION PLAN

Our executive officers participate in a Nonqualified Deferred Compensation Plan (Deferral Plan) toprovide additional retirement benefits not available in our 401k Plan because of Internal Revenue Code limitson qualified plans. Under the Deferral Plan, executive officers are entitled to defer up to 100% of base salaryand annual incentive awards. We match officer deferrals in an amount equal to 3% of the amount of basesalary above Internal Revenue Code limits on qualified plans. The matching contribution is deemed to beinvested in common shares and vests at the end of the third year after the calendar year in which the matchingcontribution was earned, or at retirement, whichever occurs first. Participants are entitled to select deemedinvestments for all deferred amounts from the same investments available in the 401k Plan. We also credit theDeferral Plan in amounts equal to the K-Vantage benefit that would have been provided under the 401k Planbut for Internal Revenue Code limits on qualified plans. This nonqualified plan is unfunded. Please see theNonqualified Deferred Compensation Table and the accompanying notes for additional plan details.

PERQUISITES

It is our philosophy that perquisites should be provided to executive officers as needed for businessreasons, and not simply in reaction to prevalent market practices.

Senior executive officers, including the NEOs, are eligible to receive reimbursement for financialplanning and tax preparation services. This benefit is intended to help ensure that executive officers seekcompetent tax advice, better prepare complex tax returns, and leverage the value of our compensationprograms. Reimbursement is limited to $4,000 every two years for financial planning services and $1,500 peryear for tax preparation services.

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All executive officers receive a special annual physical examination benefit to help ensure serioushealth issues are detected early. The benefit is limited to the reimbursement of up to $500 for fees incurredbeyond those covered by our medical plan.

When hiring a new executive officer, we sometimes reimburse executive officers for certaintemporary living and relocation expenses, or provide a lump sum payment in lieu of specific reimbursement.These expenses are grossed-up for income taxes attributable to such reimbursements.

When required for a valid business purpose, an executive officer may be accompanied by his or herspouse, in which case we will reimburse the executive officer for all spousal travel expenses, including agross-up for taxes.

Tax gross-ups are provided as described above only because of the direct corporate benefit to us whenexecutive officers incur such expenses. The impact of the aggregate amount of the tax gross-ups is not materialto us.

CONTRACTUAL AGREEMENTS

We have entered into employment agreements with certain executive officers, including Messrs.Shivery, McHale, Olivier and Butler. The agreements specify compensation and benefits during theemployment term and include benefits payable upon involuntary termination of employment and terminationof employment following a change of control. We believe that these benefits are necessary to attract and retaincompetent and capable executive talent. We also believe that these benefits help to ensure our executiveofficers’ continued dedication and objectivity at a time when they might otherwise be concerned about theirfuture employment.

In the event of a change of control, the agreements provide for enhanced cash severance benefitsfollowing termination of employment without “cause” (as defined in the employment agreement, generallyinvolving a felony conviction; acts of fraud, embezzlement, or theft in the course of employment; intentional,wrongful damage to our property; gross misconduct or gross negligence in the course of employment; or amaterial breach of obligations under the agreement) or upon termination of employment by the executive for“good reason” (as defined in the employment agreement, generally meaning an assignment to dutiesinconsistent with his position, a failure by the employer to satisfy material terms of the agreement or thetransfer of the executive to an office location more than 50 miles from his or her principal place of businessimmediately prior to a change of control). The Compensation Committee believes that termination for goodreason is conceptually the same as termination “without cause” and, in the absence of this provision, potentialacquirers would have an incentive to constructively terminate executives to avoid paying severance.

As defined in the employment agreements with Messrs. Shivery, McHale and Butler, a “change ofcontrol” means a change in ownership or control effected through (i) the acquisition of 20% or more of thecombined voting power of common shares or other voting securities, (ii) a change in the majority of the Boardof Trustees over a 24-month period, unless approved by a majority of the incumbent Trustees, (iii) certainreorganizations, mergers or consolidations where substantially all of the persons who were the beneficialowners of the outstanding common shares immediately prior to such business combination do not beneficiallyown more than 50% of the voting power of the resulting business entity, and (iv) complete liquidation ordissolution of Northeast Utilities, or a sale or disposition of all or substantially all of the assets of NortheastUtilities other than to an entity with respect to which following completion of the transaction more than 50%of common shares or other voting securities is then owned by all or substantially all of the persons who werethe beneficial owners of common shares and other voting securities immediately prior to such transaction.

Pursuant to the change of control provisions in the employment agreements, each NEO except forMr. Olivier and Ms. LaVecchia will be reimbursed for the full amount of any excise taxes imposed onseverance payments and any other payments under Section 4999 of the Internal Revenue Code. This

39

“gross-up” is intended to preserve the aggregate amount of the severance payments by compensating theexecutive officers for any adverse tax consequences to which they may become subject under the InternalRevenue Code. The mechanics and impact of the termination arrangements in the employment agreements aredescribed in more detail in the Potential Payments Upon Termination or Change of Control Tables, appearingfurther below. Mr. Olivier’s and Ms. LaVecchia’s severance payments may be reduced to avoid excise taxes.

To help protect us after the termination of an executive officer’s employment, the employmentagreements include non-competition and non-solicitation covenants pursuant to which the executive officershave agreed not to compete with us or solicit our employees for a period of two years (one year for Mr. Olivierand Ms. LaVecchia) after termination of employment.

In the event of termination of employment without “cause” or upon termination of employment by anNEO for good reason, in each case following a change of control, the expiration date of all vested unexercisedstock options held by our NEOs will be extended automatically for up to an additional 36 months, but notbeyond the original expiration date, to provide these holders with an opportunity to benefit from increasedshareholder value created by the change of control. Also, in the event of a change of control, the long-termincentive programs provide for the vesting, pro rata based on the number of days of employment during theperformance period, and payment at target of performance cash, whether or not the executive’s employmentterminates, unless the Committee determines otherwise.

Finally, in the event of a change of control, the Nonqualified Deferred Compensation Plan providesfor the immediate vesting of any employer matches, although these matches will be paid according to theschedule defined by the executive’s original election.

As discussed under the caption entitled Supplemental Benefits above, our employment agreementswith Messrs. Shivery and Olivier also include additional retirement benefits.

Mrs. Grisé retired from the Company on July 1, 2007. At the time of her retirement, Mrs. Griséaffirmed the negative covenants under her employment agreement, including her agreement, for two yearsfollowing her retirement, to refrain from engaging in activities on behalf of certain competitors, solicitingcertain employees or interfering with our business relationships. In consideration of these covenants, weagreed to provide Mrs. Grisé with a special retirement benefit which, when combined with her annual benefitunder the Retirement Plan and the Supplemental Plan, and based on her annuity elections, will result in anannual payment of approximately $618,681. On January 2, 2008, we paid Mrs. Grisé a lump sum cashpayment of $120,535 (i) as consideration for a standard general release of all claims against us in connectionwith her employment, which she delivered to us upon her retirement, and (ii) in lieu of a grant of RSUs and/orperformance cash under the 2007-2009 Long-Term Incentive Program.

TAX AND ACCOUNTING CONSIDERATIONS

Tax Considerations. All executive compensation for 2007 was fully deductible by us for federalincome tax purposes, except for approximately $465,000 in RSU distributions to Mr. Shivery.

Section 162(m) of the Internal Revenue Code limits the tax deduction for compensation paid to acompany’s CEO and certain other executives. We are entitled to deduct compensation payments above $1million as compensation expense only to the extent that these payments are “performance based” in accordancewith Section 162(m) of the Internal Revenue Code. Our annual incentive program and performance cashprogram qualify as performance-based compensation under the Internal Revenue Code. As required bySection 162(m), the Compensation Committee reports to the Board of Trustees annually the extent to whichvarious performance goals have been achieved. RSUs do not qualify as performance-based compensation.

Currently, our CEO is the only NEO to exceed the Section 162(m) limit. To preserve an employeecompensation tax deduction for us, Mr. Shivery agreed, for as long as it is beneficial to us, to defer thedistribution to him of common shares in respect of all vested RSUs, which will begin in the calendar year after

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he leaves the Company, at which time Section 162(m) will no longer apply to him. The non-deductible RSUgains for Mr. Shivery in 2007 described above relate to RSU awards granted before Mr. Shivery was elected asour CEO.

Section 409A of the Internal Revenue Code provides that amounts deferred under nonqualified deferredcompensation plans are includable in an employee’s income when vested unless certain requirements are met. Ifthese requirements are not met, employees are also subject to additional income tax and interest penalties. All ofour supplemental retirement plans, severance arrangements, and other nonqualified deferred compensation planscurrently meet, or will be amended to meet, these requirements. As a result, employees will be taxed when thedeferred compensation is actually paid to them. We will be entitled to a tax deduction at that time.

Section 280G of the Internal Revenue Code disallows a tax deduction for “excess parachutepayments” in connection with the termination of employment related to a change of control (as defined in theInternal Revenue Code), and Section 4999 of the Internal Revenue Code imposes a 20% excise tax on anyperson who receives excess parachute payments. As discussed above, our NEOs are entitled to receive certainpayments upon termination of their employment, including termination following a change of control. Underthe terms of the agreements, all NEOs except Mr. Olivier and Ms. LaVecchia are entitled to receive taxgross-ups for any payments that constitute an excess parachute payment. Accordingly, our tax deduction wouldbe disallowed under Section 280G for all excess parachute payments as well as tax gross-ups. Not all of thepayments to which NEOs are entitled are excess parachute payments. The amounts of the payments thatconstitute excess parachute payments are set forth in the tables found under the caption entitled PotentialPayments at Termination or Change of Control, below.

In the event of a change of control in which we are not the surviving entity, RSU awards granted toexecutive officers provide that the acquirer will assume or replace the awards, even if the executive remainsemployed after the change of control.

Accounting Considerations. RSUs disclosed in the Grants of Plan-Based Awards Table are accounted forbased on their grant date fair value, as determined under Statement of Financial Accounting Standards No. 123(R),which is recognized over the service period, or the three-year vesting period applicable to the RSUs. Assumptionsused in the calculation of this amount appear under the caption entitled Management’s Discussion and Analysis andResults of Operations in our Annual Report to Shareholders, filed as an exhibit to our Annual Report on Form 10-Kfor the fiscal year ended December 31, 2007. Forfeitures are estimated, and the compensation cost of the awards willbe reversed if the employee does not remain employed by us throughout the three-year vesting period. Performancecash program payments are accounted for on a variable basis based on the most likely payment outcome.

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COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Northeast Utilities Board of Trustees has reviewed and discussedthe Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with Northeast Utilitiesmanagement. Based on this review and discussion the Compensation Committee has recommended to theBoard of Trustees that the Compensation Discussion and Analysis be included in this Proxy Statement and ourAnnual Report on Form 10-K.

The Compensation Committee

E. Gail de Planque, ChairRobert E. Patricelli, Vice ChairRichard R. BoothCotton M. ClevelandSanford Cloud, Jr.James F. CordesElizabeth T. Kennan

Dated: February 12, 2008

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SUMMARY COMPENSATION TABLE

The table below summarizes the total compensation paid or earned by our Chairman, President andChief Executive Officer (CEO), Senior Vice President and Chief Financial Officer (CFO), the three other mosthighly compensated executive officers other than the CEO and CFO who were serving as executive officers atthe end of 2007, and one former executive officer who would have been among the three other most highlycompensated executive officers had she been serving as an executive officer at the end of 2007 (collectively,the Named Executive Officers or NEOs). As explained in the footnotes below, the amounts reflect theeconomic benefit to each Named Executive Officer of the compensation item paid or accrued on his or herbehalf for the fiscal year ended December 31, 2007. All salaries, annual incentive amounts and long-termincentive amounts shown for each Named Executive Officer were paid for all services rendered to NU and itssubsidiaries in all capacities.

Name andPrincipal Position Year

Salary($) (1)

Bonus($) (2)

StockAwards($) (3)

OptionAwards($) (4)

Non-EquityIncentive PlanCompensation

($) (5)

Change inPension Value

and Non-QualifiedDeferred

CompensationEarnings

($) (6)

AllOther

Compen-sation($) (7)

Total($)

Charles W. Shivery 2007 987,308 — 1,779,313 — 3,048,360 1,326,931 49,026 7,190,938Chairman of the Board,President and ChiefExecutive Officer

2006 918,846 — 1,061,205 — 1,698,395 1,274,011 40,691 4,993,148

David R. McHale 2007 434,135 — 296,891 — 755,810 614,481 7,603 2,108,920Senior Vice President andChief Financial Officer

2006 353,847 — 148,512 — 395,693 413,275 6,600 1,317,927

Leon J. Olivier 2007 462,096 — 306,115 — 777,226 251,556 15,042 1,812,035Executive Vice President-Operations (8)

2006 411,039 — 178,951 — 451,419 275,264 13,692 1,330,365

Gregory B. Butler 2007 382,244 — 319,716 — 731,950 195,321 12,941 1,642,172Senior Vice President andGeneral Counsel

2006 359,659 — 218,078 — 383,279 215,642 7,077 1,183,735

Jean M. LaVecchia 2007 273,463 — 131,333 — 335,760 51,762 8,474 800,792Vice President–HumanResources, NortheastUtilities Service Company

2006 256,799 — 96,029 — 193,216 38,865 7,995 592,904

Cheryl W. Grisé 2007 354,671 — 200,900 — 622,604 2,059,805 8,994 3,246,974Former ExecutiveOfficer (9)

2006 532,295 — 494,672 — 530,613 479,176 16,396 2,053,152

(1) Includes amounts deferred by the Named Executive Officers under the Deferral Plan, as follows:Mr. Shivery: $29,619; Mr. Olivier: $124,766; Mr. Butler: $3,822; Ms. LaVecchia: $2,735; andMrs. Grisé: $5,774. For more information, see the Executive Contributions in the Last Fiscal Yearcolumn of the Non-Qualified Deferred Compensation Plans Table.

(2) No discretionary bonus awards were made to any of the Named Executive Officers in the fiscal yearended December 31, 2007.

(3) Reflects the dollar amounts recognized for financial statement reporting purposes for the fiscal yearended December 31, 2007, in accordance with the treatment of time-based RSU and restricted sharegrants under generally accepted accounting principles. The amounts reflect the accounting expense ofshares granted in and prior to 2007. Assumptions used in the calculation of this amount appear underthe caption entitled Management’s Discussion and Analysis and Results of Operations in our annualreport to shareholders for the fiscal year ended December 31, 2007.

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In 2005, 2006 and 2007, the Named Executive Officers were granted RSUs that vest in equal annualinstallments over three years as long-term incentive compensation, except for Mrs. Grisé, who was notgranted RSUs in 2007. Pursuant to the long-term incentive programs approved in 2007, subject to theofficer’s election in December 2007 to continue the automatic four-year deferral of one-half of RSUsthat vest on a particular date, we distribute common shares upon the vesting of RSUs, except withrespect to RSUs granted to Mr. Shivery, We defer the distribution of common shares upon vesting ofRSUs granted to Mr. Shivery, which will begin in the calendar year after he leaves the Company. RSUholders are eligible to receive dividend equivalents on outstanding RSUs held by them to the sameextent that dividends are declared and paid on our common shares. Dividend equivalents areaccounted for as additional common shares that accrue and are distributed simultaneously with thecommon shares issued upon vesting of the underlying RSUs.

In 2004, the Named Executive Officers were granted RSUs that vest in equal annual installments overfour years as long-term incentive compensation. Pursuant to the long-term incentive programsapproved in 2007, subject to the officer’s election in December 2007 to continue the automatic four-year deferral of one-half of RSUs as they vest under the 2004 program, we distribute common shareswith respect to RSUs upon vesting. Also in 2004, Mr. Shivery and Mrs. Grisé were granted RSUs thatvest in equal annual installments over three years as partial payment of their awards under the 2003Annual Incentive Program. In addition, upon his appointment as our Chairman, President and CEO in2004, Mr. Shivery was granted 25,000 restricted shares that vest in equal annual installments over fouryears. We pay dividends on these restricted shares during the vesting period to the same extent thatdividends are declared and paid on our common shares.

In 2003, the Named Executive Officers were granted restricted shares that vest in equal annualinstallments over four years as long-term incentive compensation. We pay dividends on theserestricted shares during the vesting period to the same extent that dividends are declared and paid onour common shares. In connection with her retirement on July 1, 2007, unvested RSUs held byMrs. Grisé that would have vested on February 25, 2008 instead vested in proportion to the time shewas employed with us after February 25, 2006. Additional information regarding Mrs. Grisé’sretirement is available in the Post-Employment Compensation Table prepared for Mrs. Grisé.

(4) We have not granted any stock options since 2002. Accordingly, we did not grant stock options to anyof the Named Executive Officers in 2007.

(5) Includes payments to the Named Executive Officers under the 2007 Annual Incentive Program(Mr. Shivery: $1,683,360; Mr. McHale: $487,620; Mr. Olivier: $452,226; Mr. Butler: $390,700; andMs. LaVecchia: $198,740). Also includes payments under the 2005 – 2007 Long-Term IncentiveProgram (Mr. Shivery: $1,365,000; Mr. McHale: $268,190; Mr. Olivier: $325,000; Mr. Butler:$341,250; Ms. LaVecchia: $137,020; and Mrs. Grisé: $434,958). Performance goals under the 2007Annual Incentive Program were communicated to each officer by the CEO or, in the case of the CEO,jointly by the Compensation Committee and Corporate Governance Committee, during the first 90days of 2007. The Compensation Committee acting jointly with the Corporate Governance Committeedetermined the extent to which these goals were satisfied (based on input from the CEO, in the case ofthe other Named Executive Officers) in February 2008. Performance goals under the 2005 – 2007Long-Term Incentive Program were communicated to each officer by the CEO or, in the case of theCEO, jointly by the Compensation Committee and Corporate Governance Committee, during the first90 days of 2005. The Compensation Committee determined the extent to which the long-term goalswere satisfied in February 2008.

(6) Includes the actuarial increase in the present value from December 31, 2006 to December 31, 2007 ofthe Named Executive Officer’s accumulated benefits under all of our pension plans determined usinginterest rate and mortality rate assumptions consistent with those appearing under the caption entitledManagement’s Discussion and Analysis and Results of Operations in our annual report to shareholders

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for the fiscal year ended December 31, 2007. The Named Executive Officer may not be fully vested insuch amounts. More information on this topic is set forth in the notes to the Pension Benefits table,appearing further below. There were no above-market earnings on deferrals in 2007.

Mrs. Grisé retired on July 1, 2007 and began receiving her qualified pension. See Post-EmploymentCompensation: Cheryl W. Grisé for a summary of payments to Mrs. Grisé.

(7) Includes matching contributions of $6,750 allocated by us to the account of each of the NamedExecutive Officers under the 401k Plan and employer matching contributions under the Deferral Planfor the Named Executive Officers who deferred part of their salary in the fiscal year endedDecember 31, 2007 (Mr. Shivery: $22,869; Mr. Olivier: $7,113; Mr. Butler: $4,717; Ms. LaVecchia:$1,454; and Mrs. Grisé: $1,911), plus tax gross-ups (Mr. Shivery: $7,455; Mr. Olivier: $1,155;Mr. Butler: $1,474; Ms. LaVecchia: $270; and Mrs. Grisé: $333). Mr. McHale did not participate inthe Deferred Compensation Plan. Also includes perquisites received by Mr. Shivery in the amount of$11,952 consisting of reimbursement of spousal travel expenses and a cell phone allowance.

(8) Mr. Olivier was elected Executive Vice President – Operations of Northeast Utilities on February 13,2007 and has served as Executive Vice President since December 1, 2005.

(9) In connection with her retirement on July 1, 2007, on January 2, 2008, we paid Mrs. Grisé a lump sumcash payment of $120,535 (i) as consideration for a standard general release of all claims against us inconnection with her employment, which she delivered to us upon her retirement, and (ii) in lieu of agrant of RSUs and/or performance cash under the 2007-2009 long-term incentive program. Thisamount included interest accrued from July 1, 2007 through January 2, 2008. Additional informationis set forth in the Post-Employment Compensation Table prepared for Mrs. Grisé.

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GRANTS OF PLAN-BASED AWARDS DURING 2007

The Grants of Plan-Based Awards Table provides information on the range of potential payouts underall incentive plan awards during the fiscal year ended December 31, 2007. The table also discloses theunderlying stock awards and the grant date for equity-based awards. We have not granted any stock optionssince 2002. Accordingly, we did not grant stock options to any of the Named Executive Officers in 2007.

Estimated Future Payouts UnderNon-Equity Incentive Plan Awards

All OtherStock

Awards:Number ofShares ofStock or

Units(#) (3)

GrantDateFair

Value ofStockand

OptionAwards($) (4)Name Grant Date

Threshold($)

Target($)

Maximum($)

Charles W. ShiveryAnnual Incentive (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2/13/2007 493,654 987,308 1,974,616 N/A N/ALong-Term Incentive (2) . . . . . . . . . . . . . . . . . . . . . . . . . 2/13/2007 750,000 1,500,000 2,250,000 95,316 2,625,003

David R. McHaleAnnual Incentive (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2/13/2007 141,094 282,188 564,376 N/A N/ALong-Term Incentive (2) . . . . . . . . . . . . . . . . . . . . . . . . . 2/13/2007 168,750 337,500 506,250 18,382 506,240

Leon J. OlivierAnnual Incentive (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2/13/2007 150,181 300,362 600,724 N/A N/ALong-Term Incentive (2) . . . . . . . . . . . . . . . . . . . . . . . . . 2/13/2007 148,450 296,900 445,350 16,170 445,322

Gregory B. ButlerAnnual Incentive (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2/13/2007 124,229 248,458 496,916 N/A N/ALong-Term Incentive (2) . . . . . . . . . . . . . . . . . . . . . . . . . 2/13/2007 145,350 290,700 436,050 13,723 377,931

Jean M. LaVecchiaAnnual Incentive (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2/13/2007 61,530 123,059 246,118 N/A N/ALong-Term Incentive (2) . . . . . . . . . . . . . . . . . . . . . . . . . 2/13/2007 59,000 118,000 177,000 5,563 153,205

Cheryl W. GriséAnnual Incentive (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2/13/2007 93,823 187,645 187,645 N/A N/ALong-Term Incentive (2)(5) . . . . . . . . . . . . . . . . . . . . . . . 2/13/2007 — — — — —

(1) Amounts reflect the range of potential payouts, if any, under the 2007 Annual Incentive Program foreach Named Executive Officer, as described in the Compensation Discussion and Analysis. Thepayment in 2008 for performance in 2007 is set forth in the Non-Equity Incentive Plan Compensationcolumn of the Summary Compensation Table. The threshold payment under the Annual IncentiveProgram is 50% of target. However, based on Adjusted Net Income and individual performance, theactual payment under the Annual Incentive Program could be zero.

(2) Reflects the range of potential payouts, if any, pursuant to performance cash awards under the 2007 –2009 Long-Term Incentive Program, as described in the Compensation Discussion and Analysis.Grants of three-year performance cash awards were made to officers during 2007 under the 2007 –2009 Long-Term Incentive Program. Performance cash will be fully vested at the end of theperformance period and paid to the officer in cash during the first fiscal quarter after the end of theperformance period.

(3) Reflects the number of RSUs granted to each of the Named Executive Officers on February 13, 2007under the 2007 – 2009 Long-Term Incentive Program. The RSUs will vest in equal installments onFebruary 25, 2009, 2010 and 2011. Except for Mr. Shivery, we will distribute common shares inrespect to vested RSUs on a one-for-one basis immediately upon vesting, after reduction forapplicable withholding taxes. For Mr. Shivery, we will distribute common shares, after reduction forapplicable withholding taxes, in respect to vested RSUs in three approximately equal annual

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installments beginning the later of (i) six months after he leaves the Company and (ii) January of thecalendar year after he leaves the Company. RSU holders are eligible to receive dividend equivalentson outstanding RSUs held by them to the same extent that dividends are declared and paid on ourcommon shares. Dividend equivalents are accounted for as additional common shares that accrue andare distributed simultaneously with the common shares issued upon vesting of the underlying RSUs.The Annual Incentive Program does not include an equity component.

(4) Reflects the grant-date fair value of RSUs granted to the Named Executive Officers on February 13,2007, under the 2007 – 2009 Long-Term Incentive Program determined pursuant to generallyaccepted accounting principles. The Annual Incentive Program does not include an equity component.

(5) We did not grant RSUs to Mrs. Grisé in 2007 because she had previously announced her intention toretire on July 1, 2007. Additional information is set forth in the Post-Employment CompensationTable prepared for Mrs. Grisé.

EQUITY GRANTS OUTSTANDING AT DECEMBER 31, 2007

The following table sets forth option, restricted share and RSU grants outstanding at the end of ourfiscal year ended December 31, 2007 for each of the Named Executive Officers. All outstanding options werefully vested as of December 31, 2007.

Option Awards (1) Stock Awards

Name

Number ofSecurities

UnderlyingUnexercised

OptionsExercisable

(#)

OptionExercise

Price($)

OptionExpiration

Date

Number ofShares or Units

of Stock thathave not Vested

(#) (2)

Market Value ofShares or Units

of Stock thathave not Vested

($) (3)

Charles W. Shivery . . . . . . . . . . . . . . . . . . . . . 29,024 18.90 06/11/2012 180,987 5,666,706David R. McHale . . . . . . . . . . . . . . . . . . . . . . — 31,621 990,058

Leon J. Olivier . . . . . . . . . . . . . . . . . . . . . . . . — 30,768 963,359Gregory B. Butler . . . . . . . . . . . . . . . . . . . . . . — 30,368 950,833

Jean M. LaVecchia . . . . . . . . . . . . . . . . . . . . . 13,900 18.58 02/25/2012 12,243 383,3169,000 21.03 02/27/2011

Cheryl W. Grisé (4) . . . . . . . . . . . . . . . . . . . . . — 6,523 204,239

(1) We have not granted stock options since 2002.

(2) An aggregate of 140,571 unvested RSUs vested on February 25, 2008 (Mr. Shivery: 87,901;Mr. McHale: 14,484; Mr. Olivier: 15,281; Mr. Butler: 16,334; and Ms. LaVecchia: 6,571). Anadditional 94,408 unvested RSUs will vest on February 25, 2009 (Mr. Shivery: 60,489; Mr. McHale:10,852; Mr. Olivier: 9,957; Mr. Butler: 9,341; and Ms. LaVecchia: 3,769). An additional 51,009unvested RSUs will vest on February 25, 2010 (Mr. Shivery: 32,597; Mr. McHale: 6,286; Mr. Olivier:5,530; Mr. Butler: 4,693; and Ms. LaVecchia: 1,903).

(3) The market value of RSUs is determined by multiplying the number of share units by $31.31, theclosing price per share of common shares on December 31, 2007, the last trading day of the fiscalyear.

(4) All of the unvested RSUs held by Mrs. Grisé vested on January 2, 2008. We distributed commonshares, net of taxes, to Mrs. Grisé in respect of these RSUs.

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OPTIONS EXERCISED AND STOCK VESTED IN 2007

The following table reports amounts realized on equity compensation during the fiscal year endedDecember 31, 2007. In 2007, Messrs. McHale and Olivier, Ms. LaVecchia and Mrs. Grisé exercised options.The Stock Awards columns report the vesting of restricted share grants and RSU grants to the NamedExecutive Officers in February 2007.

Option Awards Stock Awards

Name

Number ofShares

Acquired onExercise (#)

ValueRealized on

Exercise($) (1)

Number ofShares

Acquired onVesting(#) (2)

ValueRealized on

Vesting($) (3)

Charles W. Shivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 61,324 1,821,947

David R. McHale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500 59,841 9,119 270,922

Leon J. Olivier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,900 261,120 10,892 323,610

Gregory B. Butler . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 13,292 394,905

Jean M. LaVecchia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,500 120,774 6,451 191,671

Cheryl W. Grisé . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171,228 2,321,646 29,882 887,784

(1) Represents the amounts realized upon option exercises, which is the difference between the optionexercise price and the market price on the date of exercise.

(2) Includes common shares distributed in respect of special grants of RSUs to Mr. Shivery (3,371 shares)and Mrs. Grisé (5,570 shares) during 2004 in connection with awards under the 2003 AnnualIncentive Program. Also includes 6,250 restricted shares granted to Mr. Shivery upon his appointmentas our Chairman, President and CEO in 2004, for which restrictions lapsed during 2007.

Also includes awards granted to our Named Executive Officers under our long-term incentiveprograms, as follows:

Name 2003 Program 2004 Program 2005 Program 2006 Program

Charles W. Shivery 10,140 5,748 14,879 27,186

David R. McHale 1,130 1,006 2,533 4,450

Leon J. Olivier 1,388 1,174 4,015 4,315

Gregory B. Butler 1,945 3,592 3,224 4,529

Jean M. LaVecchia 1,901 1,436 1,294 1,820

Cheryl W. Grisé 5,746 5,568 6,068 6,930

In all cases, we reduce the distribution of common shares by that number of shares valued in anamount sufficient to satisfy tax withholding obligations, which amount we distribute in cash. Includedin the value realized are values associated with deferred RSUs, which are also reported in theRegistrant Contributions in Last Fiscal Year column of the Non-Qualified Deferred CompensationTable.

(3) Value realized is based on $29.71 per share, the closing price of common shares on February 23,2007. This value includes the value of vested RSUs for which the distribution of common shares iscurrently deferred.

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PENSION BENEFITS IN 2007

The Pension Benefits Table sets forth the estimated present value of accumulated retirement benefitsthat would be payable to each Named Executive Officer, except for Mrs. Grisé, upon his or her retirement as ofthe first date upon which he or she is eligible to receive an unreduced pension benefit (see below). The tabledistinguishes the benefits among those available through the Retirement Plan, the Supplemental Plan and anyadditional benefits available under the respective officer’s employment agreement. The Supplemental Planprovides a make whole benefit that is based in part on compensation that is not permitted to be recognizedunder a tax-qualified plan and provides a target benefit if the eligible officer continues his or her employmentuntil age 60. Benefits under the Supplemental Plan are also based on elements of compensation that are notincluded under the Retirement Plan. This includes compensation equal to: (i) deferred compensation; (ii) thevalue of awards under the Annual Incentive Program for officers; and (iii) long-term incentive awards only forMessrs. McHale and Butler (as to each of their respective make whole benefits) and Mrs. Grisé (as to hertarget benefit), the values of which are frozen at the 2001 target levels.

The present value of accumulated benefits shown in the Pension Benefits Table was calculated as ofDecember 31, 2007 assuming benefits would be paid in the form of a 50% contingent annuitant option (thetypical form of payment for the target benefit), except for Mrs. Grisé, who chose the 75% contingent annuitantoption upon her retirement. For Mr. Olivier, who has a special retirement arrangement, we assumed that hisspecial retirement benefit would be paid as a lump sum, and his Retirement Plan benefit would be paid in theform of a 33.33% contingent annuitant option (the typical form of payment under the Retirement Plan). ForMs. LaVecchia, we assumed all benefits would be paid in the form of a 33.33% contingent annuitant option(the typical form of payment under the Retirement Plan). For this table, we assumed that none of Mr. Olivier’sbenefits are provided under the Supplemental Plan. In addition, the present value of accrued benefits for anyNamed Executive Officer assumes that benefits commence at the earliest age at which the participant would beeligible to retire and receive unreduced benefits. Named Executive Officers are eligible to receive unreducedbenefits upon the earlier of (a) attainment of age 65 or (b) attainment of at least age 55 when age plus serviceequals 85 or more years, except for Mr. Olivier. Mr. Olivier’s unreduced benefit is available at age 60 pursuantto his employment agreement. The target benefit is available for Messrs. Butler and McHale only after age 60.Accordingly, Mr. Shivery and Ms. LaVecchia are eligible to receive unreduced benefits at age 65, Messrs.McHale and Olivier are eligible to receive unreduced benefits at age 60, and Mr. Butler is eligible to receiveunreduced benefits at age 62.

The limitations applicable to the Retirement Plan under the Internal Revenue Code as of December 31,2007 were used to determine the benefits under each plan. The accrued benefits reflect actual compensation(both salary and incentives) earned during 2007. Under the terms of the Supplemental Plan, annual incentivesearned for services provided in a plan year are deemed to have been paid ratably over that plan year. Forexample, the March 2008 payment pursuant to the 2007 annual incentive program was reflected in the 2007plan compensation. We determined the present value of the benefit at retirement age by using the discount rateof 6.60% under Statement of Financial Accounting Standards No. 87 for the 2007 fiscal year end measurement(as of December 31, 2007). This present value assumes no pre-retirement mortality, turnover or disability.However, for the postretirement period beginning at the retirement age, we used the RP2000 CombinedHealthy mortality table as published by the Society of Actuaries (same table used for financial reporting underFAS 87). Additional assumptions appear under the caption entitled Management’s Discussion and Analysisand Results of Operations in our annual report to shareholders for the fiscal year ended December 31, 2007.

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Pension Benefits

Name Plan Name

Number of YearsCreditedService

(#)

Present Value ofAccumulated

Benefit($)

PaymentsDuring LastFiscal Year

($)

Charles W. Shivery (1) . . . . . . . Qualified Plan 5.6 144,671Supplemental Plan 5.6 2,595,104Other Special Benefit 8.6 1,472,337

David R. McHale . . . . . . . . . . . Qualified Plan 26.3 399,757Supplemental Plan 26.3 1,386,262

Leon J. Olivier (2) . . . . . . . . . . . Qualified Plan 8.8 260,225Supplemental Plan 6.3 —Other Special Benefit 6.3 1,428,663Other Special Benefit 32.3 1,241,765 105,966

Gregory B. Butler . . . . . . . . . . . Qualified Plan 11.0 171,856Supplemental Plan 11.0 821,985

Jean M. LaVecchia . . . . . . . . . . Qualified Plan 8.1 150,526Supplemental Plan 8.1 174,885

Cheryl W. Grisé (3) . . . . . . . . . . Qualified Plan 26.9 747,040 28,525Supplemental Plan 26.9 7,635,240

(1) Mr. Shivery’s actual service with us totaled 5.6 years at December 31, 2007. However, Mr. Shivery’semployment agreement provides for a special retirement benefit consisting of an amount equal to thedifference between: (i) the equivalent of fully-vested benefits under the Retirement Plan and theSupplemental Plan calculated by adding three years to his actual service and using an early retirementcommencement reduction factor of two percent per year for each year Mr. Shivery’s age uponretirement is under age 65, if that factor yields a more favorable result to Mr. Shivery than the factorsthen in use under the Retirement Plan, and (ii) benefits otherwise payable from the Retirement Planand the Supplemental Plan. The value of the additional three years of service on December 31, 2007was approximately $1,472,337.

(2) Mr. Olivier was employed with Northeast Nuclear Energy Company, one of our subsidiaries(NNECO), from October of 1998 through March of 2001. In connection with this employment, hereceived a special retirement benefit that provided credit for service with NNECO when calculatingthe value of his defined benefit pension, offset by the pension benefit provided by NNECO. Thebenefit, which commenced upon Mr. Olivier’s 55th birthday, provides an annuity of $105,966 peryear in a form that provides no contingent annuitant benefit. The present value of future paymentsunder this benefit was calculated using the actuarial assumptions currently used by the RetirementPlan. Mr. Olivier was rehired by us in September 2001. Mr. Olivier’s current employment agreementprovides for certain supplemental pension benefits in lieu of benefits under the Supplemental Plan ifcertain eligibility requirements are met, in order to provide a benefit similar to that provided byNNECO. Under this arrangement, if Mr. Olivier remains continuously employed by us untilSeptember 10, 2011 (or terminates his employment earlier with our consent), he will be eligible toreceive a special benefit, subject to reduction for termination prior to age 65, consisting of threepercent of final average compensation for each of his first 15 years of service since September 10,2001, plus one percent of final average compensation for each of the second 15 years of service.Alternatively, if Mr. Olivier voluntarily terminates his employment with us after his 60th birthday, orwe terminate his employment earlier for any reason other than “cause” (as defined in his employmentagreement, generally meaning willful and continued failure to perform his duties after written notice, aviolation of our Standards of Business Conduct or conviction of a felony) he is eligible to receive

50

upon retirement a lump sum payment of $2,050,000 in lieu of benefits under the Supplemental Planand the benefit described in the preceding sentence. These supplemental pension benefits will beoffset by the value of any benefits he receives from the Retirement Plan. If the conditions describedabove are not met, then Mr. Olivier would be eligible for the make whole benefit under theSupplemental Plan. Amounts reported in the table assume the termination of his employment at age 60and payment of the lump sum benefit of $2,050,000, offset by Retirement Plan benefits.

(3) Mrs. Grisé retired effective July 1, 2007 with a vested benefit of $4,754 per month in the RetirementPlan.

NONQUALIFIED DEFERRED COMPENSATION IN 2007

Name

ExecutiveContributions

in Last FY($) (1)

RegistrantContributions

in Last FY($) (2)

AggregateEarnings in

Last FY($)

AggregateWithdrawals/Distributions

($)

AggregateBalance atLast FYE

($) (3)

Charles W. Shivery . . . . . . . . . . . . . . . 29,619 1,358,004 74,652 — 2,376,430David R. McHale . . . . . . . . . . . . . . . . — 118,675 4,903 — 201,311Leon J. Olivier . . . . . . . . . . . . . . . . . . 124,766 148,298 91,760 — 1,196,301Gregory B. Butler . . . . . . . . . . . . . . . . 3,822 173,276 9,666 — 366,170Jean M. LaVecchia . . . . . . . . . . . . . . . 2,735 69,050 3,956 — 115,285Cheryl W. Grisé . . . . . . . . . . . . . . . . . 5,774 277,699 34,025 — 878,573

(1) Reflects base salary deferrals by the Named Executive Officers under the Deferral Plan for 2007.Named Executive Officers who participate in the Deferral Plan are provided with a variety ofinvestment opportunities, which the individual can modify and reallocate at any time. Fund gains andlosses are updated daily by our recordkeeper, Fidelity Investments. Contributions by the NamedExecutive Officer are vested at all times; however, the employer matching contribution vests afterthree years and will be forfeited if the executive’s employment terminates, other than for retirement,prior to vesting.

(2) Includes employer matching contributions made to the Deferral Plan as of December 31, 2007 andposted on January 31, 2008, as reported in the All Other Compensation column of the SummaryCompensation Table (Mr. Shivery: $22,869; Mr. Olivier: $7113; Mr. Butler: $4,717; Ms. LaVecchia:$1,454; and Mrs. Grisé: $1,911). The employer matching contribution is deemed to be invested incommon shares but is paid in cash at the time of distribution. All other amounts relate to the value ofcommon shares, the distribution of which was automatically deferred upon vesting of underlyingRSUs pursuant to the terms of the respective Long-Term Incentive Programs, calculated using theclosing price of the common shares on either the vesting date (February 25, 2007) or the last tradingday prior to the vesting date if the vesting date falls on a weekend or holiday. For more information,see the footnotes to the Options Exercised and Stock Vested Table.

(3) Includes the total market value of Deferral Plan balances at December 31, 2007 plus the value ofvested RSUs for which the distribution of common shares is currently deferred, based on $31.31 pershare, the closing price of our common shares on December 31, 2007.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

In the event of a change of control, Messrs. Shivery, McHale, Olivier and Butler are each entitled toreceive compensation and benefits following termination of employment without “cause” or upon terminationof employment by the executive for “good reason.” The Compensation Committee believes that terminationfor good reason is conceptually the same as termination “without cause” and, in the absence of this provision,potential acquirers would have an incentive to constructively terminate executives to avoid paying severance.

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Termination for “cause” generally means due to a felony conviction; acts of fraud, embezzlement, or theft inthe course of employment; intentional, wrongful damage to Company property; gross misconduct or grossnegligence in the course of employment; or a material breach of obligations under the agreement. Terminationfor “good reason” generally is deemed to occur following an assignment to duties inconsistent with hisposition, a failure by the employer to satisfy material terms of the agreement, or the transfer of the executive toan office location more than 50 miles from his or her principal place of business immediately prior to a changeof control.

Generally, a “change of control” means a change in ownership or control effected through (i) theacquisition of 20% or more of the combined voting power of common shares or other voting securities, (ii) achange in the majority of the Board of Trustees over a 24-month period, unless approved by a majority of theincumbent Trustees, (iii) certain reorganizations, mergers or consolidations where substantially all of thepersons who were the beneficial owners of the outstanding common shares immediately prior to such businesscombination do not beneficially own more than 50% of the voting power of the resulting business entity, and(iv) complete liquidation or dissolution of Northeast Utilities, or a sale or disposition of all or substantially allof the assets of Northeast Utilities other than to an entity with respect to which following completion of thetransaction more than 50% (75% for Mr. Olivier and Ms. LaVecchia) of common shares or other votingsecurities is then owned by all or substantially all of the persons who were the beneficial owners of commonshares and other voting securities immediately prior to such transaction.

The discussion and tables below reflect the amount of compensation that would be payable to each ofthe Named Executive Officers, except for Mrs. Grisé, in the event of: (i) termination of employment for cause;(ii) voluntary termination; (iii) involuntary not-for-cause termination (or voluntary termination for goodreason); (iv) termination in the event of disability; (v) death; and (vi) termination following a change ofcontrol. The amounts shown assume that each termination was effective as of December 31, 2007, the lastbusiness day of the fiscal year as required under Securities and Exchange Commission reporting requirements.

Payments Upon Termination

Regardless of the manner in which the employment of a Named Executive Officer terminates, he orshe is entitled to receive certain amounts earned during his or her term of employment. Such amounts include:

Š Vested restricted shares and RSUs;

Š Amounts contributed under the Deferral Plan;

Š Vested matching contributions under the Deferral Plan;

Š Pay for unused vacation; and

Š Amounts accrued and vested through the Retirement Plan, the 401k Plan and the SupplementalPlan.

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I. Post-Employment Compensation: Termination for Cause

Type of PaymentShivery

($)McHale

($)Olivier

($)Butler

($)LaVecchia

($)

Incentive Programs (1)Annual Incentives . . . . . . . . . . . . . . . . . . . . . . . . . — — — — —Performance Cash . . . . . . . . . . . . . . . . . . . . . . . . . — — — — —Restricted Stock and RSUs . . . . . . . . . . . . . . . . . . 2,106,185 201,311 254,850 349,458 139,693

Pension and Deferred CompensationQualified Retirement Plan (2) . . . . . . . . . . . . . . . . 155,498 262,348 189,224 133,144 150,524Supplemental Plan Payments (2) . . . . . . . . . . . . . . — — — — —Special Retirement Benefit (2) . . . . . . . . . . . . . . . — — — — —Deferral Plan (3) . . . . . . . . . . . . . . . . . . . . . . . . . . 175,727 — 917,443 11,296 21,756

Other BenefitsHealth and Welfare Cash Value . . . . . . . . . . . . . . — — — — —Perquisites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — —

Separation PaymentsExcise Tax & Gross-Up . . . . . . . . . . . . . . . . . . . . . — — — — —Separation Payment for Non-Compete

Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — —Separation Payment for Liquidated Damages . . . . — — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,437,410 $463,659 $1,361,517 $493,898 $311,973

(1) The assumed termination date for purposes of this table is December 31, 2007. Only those RSUs thatwere previously vested but for which common shares were not distributed would be payable upontermination of employment for cause.

(2) Only vested benefits under the Retirement Plan would be available to Named Executive Officers inthe event of termination of employment for cause. With the exception of Ms. LaVecchia andMr. Shivery, all of our Named Executive Officers are vested and eligible to receive a reduced benefitbeginning at age 55 under the Retirement Plan. None of the Named Executive Officers has satisfiedthe minimum requirements for the make-whole benefit.

(3) The amounts in this row represent vested balances in the Deferral Plan at December 31, 2007, whichwould be payable in accordance with previous distribution elections following termination ofemployment for any reason.

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II. Post-Employment Compensation: Voluntary Termination

Type of PaymentShivery

($)McHale

($)Olivier

($)Butler

($)LaVecchia

($)

Incentive Programs (1)Annual Incentives . . . . . . . . . . . . . . . . . . . . . 1,683,360 487,620 452,226 390,700 198,740Performance Cash . . . . . . . . . . . . . . . . . . . . . 2,706,420 268,190 590,915 341,250 246,700Restricted Stock and RSUs . . . . . . . . . . . . . . 4,270,458 201,311 659,895 349,458 139,693

Pension and Deferred CompensationQualified Retirement Plan (2) . . . . . . . . . . . . 181,315 262,348 189,224 133,144 150,524Supplemental Plan Payments (2) . . . . . . . . . . 3,252,426 — — — —Special Retirement Benefit (2) . . . . . . . . . . . 1,845,270 — 1,241,765 — —Deferral Plan (3) . . . . . . . . . . . . . . . . . . . . . . 270,245 — 941,451 11,296 21,756

Other BenefitsHealth and Welfare Cash Value (4) . . . . . . . . 99,704 — — — —Perquisites . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — —

Separation PaymentsExcise Tax & Gross-Up . . . . . . . . . . . . . . . . . — — — — —Separation Payment for Non-Compete

Agreement . . . . . . . . . . . . . . . . . . . . . . . . . — — — — —Separation Payment for Liquidated Damages — — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . $14,309,198 $1,219,469 $4,075,476 $1,225,848 $757,413

(1) All Named Executive Officers would receive a payout under the 2007 Annual Incentive program andthe 2005 - 2007 Performance Cash program based on actual results. All current Performance CashPrograms provide for pro-rated payout in the event that a participant’s employment terminates forretirement, death, or disability prior to the end of the performance period. “Retirement” is defined aseligibility to immediately commence a post-employment benefit under the Retirement Plan,Supplemental Plan or other employment agreement with us or one of our subsidiaries. Messrs. Shiveryand Olivier and Mrs. LaVecchia satisfy this definition and would, therefore, be entitled to receiveprorated payouts under the 2006 – 2008 and 2007 – 2009 Performance Cash Programs, whichpayments would be based on year-end results and paid in the first quarters of 2008 and 2009,respectively. The amounts reflected in the table are projections assuming target performance under thePerformance Cash Programs. For RSUs granted under the Long-Term Incentive Programs thatcommenced in 2004, 2005, 2006 and 2007, Messrs. Shivery and Olivier and Ms. LaVecchia would beentitled to receive a prorated payout of unvested RSUs for time worked in the vesting period thatwould otherwise be completed on February 25, 2008. All Named Executive Officers would receivefull payment for all previously vested RSUs for which common shares had not yet been distributed.

(2) Pension amounts are present values at the end of 2007 of life annuities payable to each NamedExecutive Officer at age 65 (age 60 for Mr. Olivier). All assumptions used to calculate these pensionvalues are the same as those described in the notes attached to the Pension Benefits Table.

(3) The deferred compensation values are vested balances for all Named Executive Officers. Messrs. Shiveryand Olivier are eligible for accelerated vesting of employer matches for 2004 through 2006 because of theirretirement eligibility. Mr. Butler and Ms. LaVecchia would forfeit these unvested matches upon voluntarytermination of employment. Mr. McHale does not participate in the Deferral Plan.

(4) Mr. Shivery’s employment agreement provides for immediate eligibility to receive retiree healthbenefits upon retirement, which would be provided as cash in lieu of such benefits.

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III. Post-Employment Compensation: Involuntary Termination, Not for Cause

Type of PaymentShivery

($)McHale

($)Olivier

($)Butler

($)LaVecchia

($)

Incentive Programs (1)Annual Incentives . . . . . . . . . . . . . . . . . . . . . 1,683,360 487,620 452,226 390,700 198,740Performance Cash . . . . . . . . . . . . . . . . . . . . . 2,706,420 268,190 590,915 341,250 246,700Restricted Stock and RSUs . . . . . . . . . . . . . . 7,772,891 201,311 659,895 349,458 139,693

Pension and Deferred CompensationQualified Retirement Plan (2) . . . . . . . . . . . . 176,678 299,813 271,922 151,451 150,524Supplemental Plan Payments (2) . . . . . . . . . . 3,141,932 — — — —Special Retirement Benefit (2) . . . . . . . . . . . 2,972,333 1,100,305 1,778,078 930,265 —Deferral Plan (3) . . . . . . . . . . . . . . . . . . . . . . 270,245 — 941,451 11,296 21,756

Other BenefitsHealth and Welfare Cash Value (4) . . . . . . . . 81,248 10,044 72,175 93,649 7,207Perquisites . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 7,000 7,000 7,000 7,000

Separation PaymentsExcise Tax & Gross-Up . . . . . . . . . . . . . . . . . — — — — —Separation Payment for Non-Compete

Agreement (5) . . . . . . . . . . . . . . . . . . . . . . 1,974,616 716,323 — 630,703 —Separation Payment for Liquidated

Damages (5) . . . . . . . . . . . . . . . . . . . . . . . . 1,974,616 716,323 — 630,703 —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . $22,761,339 $3,806,929 $4,773,662 $3,536,475 $771,620

(1) Messrs. Shivery and Olivier, and Mrs. LaVecchia would satisfy the criteria for retirement treatmentunder the Long-Term Incentive Program as described in the Voluntary Termination Table.Mr. Shivery’s employment agreement provides for full vesting and distribution of all restricted sharesand common shares in respect of RSUs upon involuntary termination of employment without cause.We would distribute to all Named Executive Officers common shares in respect of all previouslyvested RSUs for which common shares had not been distributed.

(2) Employment agreements with Messrs. Shivery, McHale and Butler provide for the addition of twoyears of age and service in the calculation of pension benefits available upon an involuntarytermination without cause. For Mr. Shivery, the two additional years of age and service is in additionto the three additional years of service to which he is entitled upon voluntary termination ofemployment. Pension amounts reflected above are the present values at the end of 2007 of benefitspayable to each Named Executive Officer at the earliest unreduced benefit age (Mr. Shivery: age 63;Mr. McHale: age 63; Mr. Olivier: age 58; Mr. Butler: age 62; and Ms. LaVecchia: age 65). Except forthe benefit payable to Mr. Olivier, these benefits are annuities calculated using the same assumptionsdescribed in the notes to the Pension Benefits Table. Under the terms of his employment agreement, ifMr. Olivier’s employment is terminated for any reason other than for “cause” (as defined in hisemployment agreement, generally meaning willful and continued failure to perform his duties afterwritten notice, a violation of our Standards of Business Conduct or conviction of a felony), he will beimmediately eligible to receive a special retirement benefit of $2,050,000 paid as a lump sum, offsetby benefits from the Retirement Plan.

(3) The deferred compensation values are vested balances for all Named Executive Officers. Messrs.Shivery, Olivier and Butler are eligible for accelerated vesting of the employer matches for 2004through 2006 because of their retirement eligibility. Ms. LaVecchia would forfeit her unvestedmatches upon involuntary termination of employment.

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(4) Employment agreements with Messrs. Shivery, McHale and Butler provide for the payment of twoyears of active benefits value and retirement benefits if adding the “two additional years” of age andservice would have made the officer eligible under the retiree health plan. Mr. Shivery’s employmentagreement provides for automatic eligibility for retiree health benefits, and Mr. Olivier’s employmentagreement provides for retiree health benefits if his employment terminates involuntarily withoutcause. Six months of employer-paid COBRA benefits are generally made available to all employeeswhose employment terminates involuntarily without cause. Thus, the amounts reported in the table arethe cash value of 18 months of employer contributions toward active employee benefits for all NamedExecutive Officers, plus retiree benefits for Messrs. Shivery, Olivier and Butler after 24 months, eachof whom would not otherwise be eligible for retiree health benefits except as provided under theiremployment agreements. These amounts would be paid as a lump sum and grossed up for applicablewithholding taxes. All of the NEOs are also eligible to receive reimbursement for two years offinancial planning and tax preparation services.

(5) Employment agreements with Messrs. Shivery, McHale and Butler provide for a severance paymentequal to two times the base salary plus annual incentives at target, one multiple of which isconditioned upon the execution of a non-competition agreement.

IV. Post-Employment Compensation: Termination Upon Disability

Type of PaymentShivery

($)McHale

($)Olivier

($)Butler

($)LaVecchia

($)

Incentive Programs (1)Annual Incentives . . . . . . . . . . . . . . . . . . . . . 1,683,360 487,620 452,226 390,700 198,740Performance Cash . . . . . . . . . . . . . . . . . . . . . 2,706,420 518,517 590,915 613,498 246,700Restricted Stock and RSUs . . . . . . . . . . . . . . 4,270,458 201,311 659,895 349,458 139,693

Pension and Deferred CompensationQualified Retirement Plan (2) . . . . . . . . . . . . 181,315 592,797 260,225 171,486 150,524Supplemental Plan Payments (2) . . . . . . . . . . 3,252,426 2,041,949 — 822,353 174,886Special Retirement Benefit (2) . . . . . . . . . . . 1,845,270 — 1,428,663 — —Deferral Plan (3) . . . . . . . . . . . . . . . . . . . . . . 270,245 — 941,451 11,296 21,756

Other BenefitsHealth and Welfare Cash Value (4) . . . . . . . . 92,899 — 82,961 — —Perquisites . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — —

Separation PaymentsExcise Tax & Gross-Up . . . . . . . . . . . . . . . . . — — — — —Separation Payment for Non-Compete

Agreement . . . . . . . . . . . . . . . . . . . . . . . . . — — — — —Separation Payment for Liquidated

Damages . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . $14,302,393 $3,842,194 $4,416,336 $2,358,791 $932,299

(1) All current long-term Performance Cash Programs provide for a prorated payout in the event that aparticipant’s employment terminates prior to the end of the performance period for reason ofdisability. While actual values are reported for the 2007 Annual Incentive Program and the 2005 –2007 Performance Cash Program amounts, amounts shown for the Performance Cash Program for2006 – 2008, and 2007 – 2009 are based on target performance in accordance with program rules andprorated for time worked in the performance period. For RSUs, a disabled participant would receivepayout of unvested RSUs prorated for time worked in the vesting period that would otherwise becompleted on February 25, 2008 plus payment for all previously vested but not yet paid RSUs.

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(2) Under our Long-Term Disability (LTD) program, disabled participants in the Retirement Plan areallowed to continue to accrue service in the Retirement Plan during the period when they are receivingdisability payments. Disability payments stop when the LTD participant elects to commence pensionpayments, but not later than age 65. We have assumed similar treatment in the development of thepension amounts reported in this table. For purposes of valuing the pension benefits, we have assumedthat each Named Executive Officer would remain on LTD until his or her first unreduced make wholeor target pension benefit age (Mr. Shivery, age 65; Mr. McHale, age 55; Mr. Olivier, age 60;Mr. Butler, age 62; and Ms. LaVecchia: age 65). Except for the benefit payable to Mr. Olivier, allpayments would consist of life annuities calculated using the same assumptions detailed in the notes tothe Pension Benefits Table. Mr. Olivier’s benefit would be paid as a lump sum of $2,050,000, offsetby benefits from the Retirement Plan.

(3) The deferred compensation values are vested balances for all Named Executive Officers, since allunvested employer matching contribution would become vested upon disability.

(4) Mr. Olivier’s employment agreement provides for retiree health benefits if his employment terminatesinvoluntarily without cause, even if he would not otherwise qualify for such benefits. The amountreported is the value of our contributions for these benefits paid as a lump sum grossed up forapplicable withholding taxes. Mr. Shivery’s employment agreement provides for immediate eligibilityto receive retiree health benefits upon retirement, which would be provided as cash in lieu of suchbenefits.

V. Post-Employment Compensation: Death

Type of PaymentShivery

($)McHale

($)Olivier

($)Butler

($)LaVecchia

($)

Incentive Programs (1)Annual Incentives . . . . . . . . . . . . . . . . . . . . . 987,308 282,188 300,362 248,459 123,058Performance Cash . . . . . . . . . . . . . . . . . . . . . 2,706,420 518,517 590,915 613,498 246,700Restricted Stock and RSUs . . . . . . . . . . . . . . 4,270,458 201,311 659,895 349,458 139,693

Pension and Deferred CompensationQualified Retirement Plan (2) . . . . . . . . . . . . 169,809 1,031,233 271,922 120,786 56,395Supplemental Plan Payments (2) . . . . . . . . . . 3,045,348 3,523,147 — 263,443 65,523Special Retirement Benefit (2) . . . . . . . . . . . 1,727,805 — 1,778,078 — —Deferral Plan (3) . . . . . . . . . . . . . . . . . . . . . . 270,245 — 941,451 11,296 21,756

Other BenefitsHealth and Welfare Cash Value (4) . . . . . . . . 55,599 — 38,443 — —Perquisites . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — —

Separation PaymentsExcise Tax & Gross-Up . . . . . . . . . . . . . . . . . — — — — —Separation Payment for Non-CompeteAgreement . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — —Separation Payment for LiquidatedDamages . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . $13,232,992 $5,556,396 $4,581,066 $1,606,940 $653,125

(1) The 2006-2008 and 2007-2009 Performance Cash Programs provide for a prorated payout in the eventthat a participant’s employment terminates prior to the end of the performance period for reason ofdeath. All such payments would be prorated for time worked in each performance period and paid attarget. For RSUs, a deceased participant’s beneficiary would receive a prorated payout of unvested

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RSUs for time worked in the vesting period that would otherwise be completed on February 25, 2008plus payment for all previously vested but not yet paid RSUs.

(2) Represents the lump sum present value of pension payments to the surviving beneficiary of eachNamed Executive Officer.

(3) The deferred compensation values are vested balances for all Named Executive Officers since allunvested employer matching contribution would become vested on account of death.

(4) Upon his death, Mr. Olivier’s employment agreement provides for retiree health benefits for hisspouse if she would not otherwise qualify for such benefits. The amount reported is the value of ourcontributions for these benefits paid as a lump sum grossed up for applicable withholding taxes.

Payments Made Upon a Change of Control

The employment agreements with Messrs. Shivery, McHale, Olivier and Butler include change of controlbenefits. We have not entered into an employment agreement with Ms. LaVecchia. Mr. Olivier and Ms. LaVecchiaparticipate in the Special Severance Program for Officers of Northeast Utilities System Companies (SSP), whichprovides benefits upon termination of employment in connection with a change of control. The employmentagreements and the SSP are binding on us and, except for Mr. Shivery’s agreement, on certain of our majority-owned subsidiaries. The terms of the various employment agreements are substantially similar, except for theagreement with Mr. Olivier, which refers instead to the change of control provisions of the SSP.

Pursuant to the employment agreements and under the terms of the SSP, if an executive officer’semployment terminates following a change of control, other than termination of employment for “cause” (asdefined in the employment agreements, generally meaning wilful and continued failure to perform his dutiesafter written notice, a violation of our Standards of Business Conduct or conviction of a felony), or by reasonof death or disability), or if the executive officer terminates his or her employment for “good reason” (asdefined in the employment agreements, generally meaning an assignment to duties inconsistent with hisposition, a failure by the employer to satisfy material terms of the agreement or the transfer of the executive toan office location more than 50 miles from his or her principal place of business immediately prior to a changeof control), then the executive officer will receive the benefits listed below, which receipt is conditioned upondelivery of a binding release of all legal claims against the Company:

Š A lump sum severance payment (except for Mr. Olivier and Ms. LaVecchia) of two-times the sum ofthe executive’s base salary plus all annual awards that would be payable for the relevant yeardetermined at target (Base Compensation);

Š As consideration for a non-competition and non-solicitation covenant, a lump sum payment in anamount equal to the Base Compensation (equal to two-times Base Compensation for Mr. Olivier andMs. LaVecchia under the terms of the SSP);

Š Health continuation coverage, or the cash equivalent, paid by us for three years (two years forMr. Olivier and Ms. LaVecchia);

Š Benefits as if provided under the Supplemental Plan, notwithstanding eligibility requirements for theTarget Benefit, including favorable actuarial reductions and the addition of three years to theexecutive’s age and years of service as compared to benefits available upon voluntary termination ofemployment (except for Mr. Olivier, whose benefits are described below, and Ms. LaVecchia);

Š Automatic vesting and distribution of common shares in respect of all unvested RSUs; and

Š A lump sum payment in an amount equal to the excise tax charged to the executive under the InternalRevenue Code as a result of the receipt of any change of control payments, plus tax gross-up (exceptfor Mr. Olivier and Ms. LaVecchia).

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The summaries of the employment agreements above do not purport to be complete and are qualifiedin their entirety by the actual terms and provisions of the employment agreements, copies of which have beenfiled as exhibits to our Annual Report on Form 10-K for the year ended December 31, 2007.

VI. Post-Employment Compensation: Termination Following a Change of Control

Type of PaymentShivery

($)McHale

($)Olivier

($)Butler

($)LaVecchia

($)

Incentive Programs (1)Annual Incentives . . . . . . . . . . . . . . . . . . . . 1,683,360 487,620 452,226 390,700 198,740Performance Cash . . . . . . . . . . . . . . . . . . . . 4,125,000 811,990 871,900 894,550 360,320Restricted Stock and RSUs . . . . . . . . . . . . . 7,772,891 1,191,369 1,218,209 1,300,291 523,009

Pension and Deferred CompensationQualified Retirement Plan (2) . . . . . . . . . . . 181,315 319,037 271,922 161,197 150,524Supplemental Plan Payments (2) . . . . . . . . . 3,252,426 — — — —Special Retirement Benefit (2) . . . . . . . . . . . 3,690,540 1,200,788 1,778,078 1,103,689 —Deferral Plan (3) . . . . . . . . . . . . . . . . . . . . . . 270,245 — 941,451 11,296 21,756

Other BenefitsHealth and Welfare Cash Value (4) . . . . . . . 85,527 123,431 72,175 110,717 7,207Perquisites . . . . . . . . . . . . . . . . . . . . . . . . . . 8,500 8,500 8,500 8,500 8,500

Separation PaymentsExcise Tax & Gross-Up (5) . . . . . . . . . . . . . 5,020,003 2,029,702 — 1,752,663 —Separation Payment for Non-Compete

Agreement . . . . . . . . . . . . . . . . . . . . . . . . 1,974,616 716,323 762,458 630,703 396,521Separation Payment for Liquidated

Damages . . . . . . . . . . . . . . . . . . . . . . . . . . 3,949,232 1,432,646 762,458 1,261,405 396,521

Total . . . . . . . . . . . . . . . . . . . . . . . . . $32,013,655 $8,321,406 $7,139,377 $7,625,711 $2,063,098

(1) All Named Executive Officers would receive a payout under the 2007 Annual Incentive Program andthe 2005 – 2007 Performance Cash Program based on actual results. Under the terms of the 2006 –2008 and 2007 – 2009 Performance Cash Programs, participants who are terminated upon a Change ofControl become eligible for immediate payout of a target award, and under the terms of theoutstanding grants of restricted shares and RSUs, all unvested shares and share units held byparticipants terminated upon a Change of Control would be immediately vested and paid.

(2) Employment agreements with Messrs. Shivery, McHale and Butler provide for the addition of threeyears of age and service in the calculation of pension benefits available upon termination following aChange of Control. For Mr. Shivery, this three years of added age and service are in addition to thethree years of added service provided upon his voluntary termination. Pension amounts reflected in thetable are present values at the end of 2007 of benefits payable to each Named Executive Officer at theearliest unreduced benefit age (Mr. Shivery: age 62; Mr. McHale: age 62; Mr. Olivier: age 58;Mr. Butler: age 62; and Ms. LaVecchia: age 65). All but the benefit payable to Mr. Olivier areannuities that are calculated using the assumptions detailed in the notes to the Pension Benefits Table.Mr. Olivier’s benefit would be paid as a lump sum of $2,050,000 as offset by benefits from theRetirement Plan.

(3) The deferred compensation values are vested balances for all Named Executive Officers since allunvested matching contribution would become fully vested upon the occurrence of a change ofcontrol.

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(4) Employment agreements with Messrs. Shivery, McHale and Butler provide for the payment of threeyears of active health benefits value and retiree health benefits if adding the three years of age andservice would have made the executive eligible under the Retirement Plan. Mr. Olivier andMs. LaVecchia participate in the SSP and are eligible for two years of active health benefitscontinuation. Six months of company-paid COBRA benefits are generally made available to allemployees whose employment terminates involuntarily without cause. As a result, the amountsreported in the table represent the cash value of 30 months of employer contributions for each NamedExecutive Officer except Mr. Olivier and Ms. LaVecchia, whose benefits would consist of the cashvalue of 18 months of employer contributions. In addition to continuation of active health benefits,retiree health benefits for Messrs. Shivery and Olivier, which are provided for in each of theirrespective employment agreements regardless of eligibility, would be paid as a lump sum and grossedup for applicable withholding taxes. All Named Executive Officers are also eligible to receivereimbursement of fees for financial planning and tax preparation services for three years.

(5) Excise Tax gross-up: Upon a Change of Control, employees may be subject to certain excise taxesunder Section 280G of the Internal Revenue Code. Employment agreements with each NamedExecutive Officer except Mr. Olivier and Ms. LaVecchia provide for a grossed-up reimbursement ofthese excise taxes. The amounts in the table are based on a Section 280G excise tax rate of 20%, astatutory federal income tax withholding rate of 35%, a Connecticut state income tax rate of 5%, and aMedicare tax rate of 1.45%. Mr. Olivier’s and Ms. LaVecchia’s benefits through the SSP do notprovide for this payment. Severance Payments: Employment agreements with each NEO exceptMr. Olivier and Ms. LaVecchia provide for a severance payment equal to three-times base salary plusannual incentives at target, one multiple of which is associated with the execution of a writtennon-competition agreement. Mr. Olivier’s and Ms. LaVecchia’s benefits under the SSP would consistof a payment of two-times base salary plus target annual incentives, all of which is conditioned uponthe execution of a written non-competition agreement.

Cheryl W. Grisé

The following table sets forth the payments to be received by Cheryl Grisé, a former executive vicepresident, following her retirement on July 1, 2007. At the time Mrs. Grisé announced her intention to retire,we entered into an agreement in principle with her to ensure that she would remain with us until at least July 1,2007. Under the agreement in principle, on January 2, 2008, we paid Mrs. Grisé a lump sum cash payment of$120,535 (i) as consideration for a standard general release of all claims against us in connection with heremployment, which she delivered to us upon her retirement, and (ii) in lieu of a grant of RSUs and/orperformance cash under the 2007-2009 long-term incentive program. Because Mrs. Grisé retired, she is alsoentitled to receive a payment under the 2007 Annual Incentive Program. In addition, as set forth in the notes tothe Grants of Plan-Based Awards Table, Mrs. Grisé is eligible for distributions in the first quarter of 2008under the 2005-2007 Performance Cash Program based on goal achievement, prorated to reflect thatMrs. Grisé performed services for two and one-half years out of the three-year period, and an award under the2006-2008 Performance Cash Program based on goal achievement, prorated to reflect that Mrs. Griséperformed services for one and one-half years out of the three-year period ending December 31, 2008.Mrs. Grisé’s unvested RSUs from grants made in 2004, 2005, and 2006 were prorated based on service during2007, and the remainder were forfeited. Mrs. Grisé is entitled to all of her vested but deferred RSUs, and she iseligible for a vested benefit under the Retirement Plan and the Supplemental Executive Retirement Plan.

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Post-Employment Compensation: Cheryl W. Grisé

Payment ($)

Incentive Programs (1)Annual Incentive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187,645Performance Cash Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 711,994Restricted Stock and RSUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 778,742Pension and Deferred Compensation (2)Qualified Retirement Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,525Supplemental Plan Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —Special Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —Other Benefits (3)Health and Welfare Cash Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —Separation Payments (4)Separation Payment for Non-Compete Agreement . . . . . . . . . . . . . . . . . . . . . . . . 120,535Separation Payment for Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,827,441

(1) Upon retirement, Mrs. Grisé became eligible to receive a payout under the 2007 Annual IncentiveProgram. She is also eligible to receive prorated payouts under the 2005-2007 and 2006-2008Performance Cash Programs, which will be paid in 2008 and 2009, respectively, based on finalperformance. Amounts reflected in the table are actual payouts for the 2005-2007 Performance CashProgram and estimated payouts based on target performance for the 2006-2008 Performance CashProgram. Upon Mrs. Grisé’s retirement on July 1, 2007, unvested RSUs were vested in proportion tothe time she was employed with us in 2007. Under the terms of the long-term incentive programs inwhich Mrs. Grisé participated, the remaining unvested RSUs were forfeited. A total of 24,872 RSUsvested and 19,373 RSUs were forfeited. On January 4, 2008, we distributed to Mrs. Grisé 17,361common shares in respect of all previously vested RSUs (for which distribution of common shares hadbeen deferred) following a six-month delay required for deferred compensation paid to “keyemployees” under Section 409A of the Internal Revenue Code, and we withheld 7,511 shares tosatisfy Mrs. Grisé’s tax obligations. Mrs. Grisé realized $778,743 in ordinary income as a result of thistransaction.

(2) Pension values are the total accrued pension benefit payable as an annuity that pays 75% to hersurviving spouse. At the time of her retirement, Mrs. Grisé began receiving her qualified retirementbenefit. In compliance with Section 409A of the Internal Revenue Code, we delayed the start ofMrs. Grisé’s Supplemental Executive Retirement Plan (SERP) payments until six months after herretirement. On January 2, 2008, we paid six-months of Mrs. Grisé’s SERP “make-whole” benefit($134,046) and six months of the SERP “target” benefit ($155,155). Mrs. Grisé’s monthly SERP“make-whole” and “target” benefits are $21,693 and $25,109, respectively. Assumptions used in thecalculation of this benefit are further discussed in the notes to the Pension Benefits table.

(3) Under the Retirement Plan, Mrs. Grisé became eligible to receive health benefits upon retirement.Mrs. Grisé did not receive any health and welfare benefits in excess of the benefits we offer to all ofour employees.

(4) In lieu of participation in the 2007-2009 Long-Term Incentive Program, Mrs. Grisé’s agreement inprinciple provides for a lump sum payment in the amount of $120,535, which we paid to her sixmonths after her retirement on January 2, 2008.

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TRUSTEE COMPENSATION

The Compensation Committee determines compensation for the Trustees based on competitive marketpractices for the total value of compensation and the allocation of cash and equity. The Committee establishesTrustee compensation at the median of the market of similarly-sized general industry companies. Thecompensation elements consist of an annual retainer, meeting fees and equity grants in the form of RSUs. Thelevel of Trustee compensation established by the Committee enables us to attract Trustees who have a broadrange of backgrounds and experiences.

We pay an annual retainer to each Trustee who is not employed by us or our subsidiaries. We pay anadditional retainer to our Lead Trustee and the Chairs of each of the Audit, Compensation, CorporateResponsibility, Corporate Governance and Finance Committees. Each retainer is paid in four equal quarterlyinstallments. We pay one-half of the value of the retainers payable to the Chairs of each of the Audit andCompensation Committees in the form of common shares. The following table sets forth the amounts ofnon-employee Trustee retainers for 2007:

RetainerAnnualAmount

Annual Retainer (all Trustees) . . . . . . . . . . . . . . . . . . . . . . . . . . $45,000Lead Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $50,000Audit Committee Chair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,000Compensation Committee Chair . . . . . . . . . . . . . . . . . . . . . . . . . $15,000Corporate Responsibility Committee Chair . . . . . . . . . . . . . . . . $ 7,500Corporate Governance Committee Chair . . . . . . . . . . . . . . . . . . $ 7,500Finance Committee Chair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,000

During 2007, we paid each non-employee Trustee $1,500 for attendance in person or by telephone ateach meeting of the full Board and each committee on which he or she served.

Under the Northeast Utilities Incentive Plan, each non-employee Trustee is eligible to receive share-based grants during each calendar year. In January 2007, each non-employee Trustee was granted 3,000 RSUsunder the Incentive Plan, all of which vested on the one year anniversary of the date of grant. We distributedcommon shares in respect of these RSUs in January 2008.

Before 2007, we distributed common shares in respect of only one-half of RSUs granted tonon-employee Trustees upon vesting. We deferred the distribution of common shares with respect to theremaining one-half of the RSUs until the earlier of four years after the vesting date or the month following themonth in which a Trustee ceases to serve on the Board. In 2007, the Board adopted share ownership guidelinesapplicable to the non-employee Trustees and eliminated the distribution deferral provision for RSUs. However,Trustees were entitled to elect, on or before December 31, 2007, to make an irrevocable election to continue todefer distribution of common shares upon vesting of RSUs until four years after the vesting date. As a result,unless a Trustee elected to defer distribution of common shares, we distributed in January 2008 commonshares in respect of previously vested RSUs for which distribution had been deferred. The share ownershipguidelines require Trustees to attain ownership of 7,500 common shares and/or RSUs having a fair marketvalue equal to approximately five times the value of the current annual retainer, by January 2012. All of thecurrent Trustees, except for Mr. Leibler, who was elected as a Trustee on November 1, 2006, exceed the shareownership guidelines. Mr. Clarkeson, a nominee for election as Trustee, does not currently own any commonshares.

Prior to the beginning of each calendar year, non-employee Trustees may irrevocably elect to receiveall or any portion of their retainers and fees in the form of common shares. Pursuant to the Northeast UtilitiesDeferred Compensation Plan for Trustees, each Trustee may also irrevocably elect to defer receipt of all or a

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portion of cash and/or equity compensation, including restricted share units issued under the Incentive Plan.Deferred funds are credited with interest at the rate set forth in Section 37-1 of the Connecticut GeneralStatutes (as amended), which rate was 8% for all of 2007. Deferred compensation is payable either in a lumpsum or in one to five annual installments in accordance with the Trustee’s prior election.

A non-employee Trustee who performs additional Board-related services in the interest of theNortheast Utilities System companies upon the request of either the Board or the Chairman of the Board isentitled to receive additional compensation equal to $750 per half-day plus reasonable expenses. In addition,we pay travel-related expenses for spouses of Trustees who attend Board functions. The Internal RevenueService considers payment of travel expenses for a Trustee’s spouse to be imputed income to the individualTrustee. As a result, we provide each Trustee with a gross-up payment in an amount sufficient to pay theincome tax liability for the imputed income attributable to such travel expenses.

The table below sets forth all compensation paid or accrued by each non-employee Trustee in 2007.

Trustee

Fees Earnedor Paid in

Cash(1) ($)

StockAwards(2) ($)

OptionAwards(3) ($)

Non-EquityIncentive

Compensation ($)

Change inPension Value

and Non-QualifiedDeferred

CompensationEarnings

(4) ($)

All OtherCompen-

sation(5) ($)

Total($)

Richard H. Booth . . . . . . . . 118,000 85,290 — — 0 1,204 204,494Cotton M. Cleveland . . . . . 98,250 85,290 — — 9,578 1,805 194,923Sanford Cloud, Jr. . . . . . . . 117,000 85,290 — — 84 1,920 204,294James F. Cordes . . . . . . . . . 120,500 85,290 — — 2,209 4,029 212,028E. Gail de Planque . . . . . . . 123,750 92,790 — — 0 4,349 220,889John G. Graham . . . . . . . . . 107,500 95,290 — — 8,514 2,366 213,670Elizabeth T. Kennan . . . . . 179,000 85,290 — — 0 6,993 271,283Kenneth R. Leibler . . . . . . 102,000 85,290 — — 0 553 187,843Robert E. Patricelli . . . . . . 108,000 85,290 — — 0 0 193,290John F. Swope . . . . . . . . . . 109,500 85,290 — — 0 0 194,790

(1) Represents the aggregate dollar amount of all fees earned or paid in cash, including annual retainerfees, committee and/or committee chair fees, and meeting attendance fees. Also includes the amountof cash compensation deferred at the election of the Trustee. For the fiscal year ended December 31,2007, Mrs. Cleveland deferred receipt of all of her board retainer and Mr. Graham deferred receipt ofall of his retainer and meeting fees.

(2) Represents the aggregate dollar amount of RSU grants expensed in 2007 under generally acceptedaccounting principles. Each trustee received a grant of 3,000 restricted share units on January 3, 2007at a grant date fair value of $85,290 which grant vested on January 10, 2008. We paid one-half of theretainers for the Chair of the Compensation Committee and the Chair of the Audit Committee in cash.We paid the balance of these retainers in common shares with a grant date fair value equal to one-halfof the amount of the retainer on the payment dates. The amounts reported for Dr. de Planque andMr. Graham include the grant date fair value of these common shares. For Dr. de Planque, the amountincludes one-half of the retainer paid to her as Chair of the Compensation Committee during 2007, or$7,500, which was equal to the grant date market value of 254 common shares. For Mr. Graham, theamount includes one-half of the retainer paid to him as Chair of the Audit Committee during 2007, or$10,000, which was equal to the grant date market value of 336 common shares. Mr. Graham deferredthe receipt of these shares in accordance with the provisions of the Northeast Utilities DeferredCompensation Plan for Trustees. In addition, outstanding RSU grants were increased by dividend-

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equivalents on the amount of those RSUs. These dividend-equivalents are subject to the samerestrictions as the underlying RSUs. Total grants and options held by our Trustees on December 31,2007 were as follows:

Trustee

Grant AwardsOutstanding on

December 31, 2007

Option AwardsOutstanding on

December 31, 2007

Richard H. Booth . . . . . . . . . . . . . 21,248 5,000Cotton M. Cleveland . . . . . . . . . . 19,262 12,500Sanford Cloud, Jr. . . . . . . . . . . . . 9,018 —James F. Cordes . . . . . . . . . . . . . . 14,499 5,000E. Gail de Planque . . . . . . . . . . . . 6,396 7,500John G. Graham . . . . . . . . . . . . . . 22,621 —Elizabeth T. Kennan . . . . . . . . . . 21,694 —Kenneth R. Leibler . . . . . . . . . . . 3,775 —Robert E. Patricelli . . . . . . . . . . . 3,000 12,500John F. Swope . . . . . . . . . . . . . . . 18,259 12,500

All options are vested. Dr. Kennan and Messrs. Cloud, Graham and Leibler did not hold options topurchase common shares at December 31, 2007. All equity holdings are reported in the tablecaptioned Common Stock Ownership of Trustees and Management appearing on page 18 of thisProxy Statement. Assumptions used in the calculation of this amount appear under the caption entitledManagement’s Discussion and Analysis and Results of Operations in our Annual Report toShareholders, filed as an exhibit to our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2007. Forfeitures are estimated, and the compensation cost of the restricted share unitawards will be reversed if the Non-employee trustee does not remain a trustee throughout the one-yearvesting period.

(3) We did not grant options to non-employee Trustees in 2007. We have not granted stock options since2002.

(4) Reflects the difference between the interest earned on amounts deferred by non-employee Trusteesunder the NU Deferred Compensation Plan for Trustees calculated at 120% of the Internal RevenueService prescribed applicable monthly long-term federal rate which represents a market rate of return.We do not provide pension benefits to our non-employee Trustees.

(5) Reflects the amount of tax gross-ups paid to non-employee Trustees.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Trustees and executive officers ofNortheast Utilities and persons who beneficially own more than ten percent of the outstanding common sharesof Northeast Utilities to file reports of ownership and changes in ownership with the Securities and ExchangeCommission and the New York Stock Exchange. Based on such reports and the written representations of ourTrustees and executive officers, Northeast Utilities believes that for the year ended December 31, 2007, allsuch reporting requirements were complied with in a timely manner.

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PROPOSAL 2

RATIFICATION OF THE SELECTION OF AUDITORS

The independent registered public accounting firm of Deloitte & Touche LLP was selected by theAudit Committee to serve as independent auditors of Northeast Utilities and its subsidiaries for 2007. Theshareholders ratified the selection of Deloitte & Touche LLP as the independent auditors for Northeast Utilitiesand its subsidiaries at the 2007 Annual Meeting of Shareholders. Pursuant to the recommendation of the AuditCommittee, the Board of Trustees now recommends that shareholders ratify the selection by the AuditCommittee of Deloitte & Touche LLP to conduct an audit of Northeast Utilities and its subsidiaries for 2008.Our Declaration of Trust does not require that our shareholders ratify the selection of independent auditors.The Board is submitting the selection of Deloitte & Touche LLP to our shareholders for ratification as a matterof good corporate practice. Whether or not the selection of Deloitte & Touche LLP is ratified by theshareholders, the Audit Committee may, in its discretion, change the selection at any time during the year if itdetermines that such change would be in the best interests of the Company and its shareholders. This isconsistent with the responsibilities of the Audit Committee as outlined in its charter.

Representatives of Deloitte & Touche LLP are expected to be present at the meeting. They will havethe opportunity to make a statement, if they desire to do so, and to respond to appropriate questions raised byshareholders at the meeting.

The affirmative vote of a majority of those votes cast at the meeting is required to ratify the selectionof Deloitte & Touche LLP.

The Board of Trustees recommends that shareholders vote FOR this proposal.

RELATIONSHIP WITH INDEPENDENT AUDITORS

Pre-Approval of Services Provided by Principal Auditors

The Audit Committee has established policies and procedures regarding the pre-approval of servicesprovided by the principal auditors. Those policies and procedures delegate pre-approval of services to theAudit Committee Chair and/or Vice Chair provided that such offices are held by Trustees who are“independent” within the meaning of the Sarbanes-Oxley Act of 2002 and that all such pre-approvals arepresented to the Audit Committee at the next regularly scheduled meeting of the Committee.

Fees Paid to Principal Auditor

We paid Deloitte & Touche LLP fees aggregating $3,108,754 and $3,134,359 for the years endedDecember 31, 2007 and 2006, respectively, comprised of the following:

1. Audit Fees

The aggregate fees billed to us and our subsidiaries by Deloitte & Touche LLP, the member firms ofDeloitte Touche Tohmatsu and their respective affiliates (collectively, the Deloitte Entities), for audit servicesrendered for the years ended December 31, 2007 and 2006 totaled $2,789,900 and $2,938,255, respectively.The audit fees were incurred for audits of our annual consolidated financial statements and those of oursubsidiaries, reviews of financial statements included in our Quarterly Reports on Form 10-Q and those of oursubsidiaries, comfort letters, consents and other costs related to registration statements and financings. The feesalso included audits of internal controls over financial reporting as of December 31, 2007 and 2006.

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2. Audit Related Fees

The aggregate fees billed to us and our subsidiaries by the Deloitte Entities for audit related servicesrendered for the years ended December 31, 2007 and 2006 totaled $260,000 and $150,000, respectively,primarily related to the examination of management’s assertions about the securitization subsidiaries of TheConnecticut Light and Power Company, Public Service Company of New Hampshire and WesternMassachusetts Electric Company and about our 401k Plan.

3. Tax Fees

The aggregate fees billed to us and our subsidiaries by the Deloitte Entities for tax services for theyears ended December 31, 2007 and 2006 totaled $57,354 and $44,604, respectively. These services relatedsolely to reviews of tax returns. There were no services related to tax advice or tax planning.

4. All Other Fees

The aggregate fees billed to us and our subsidiaries by the Deloitte Entities for services other than theservices described above totaled $1,500 for each of the years ended December 31, 2007 and 2006, consistingof a license fee for access to an accounting research database.

The Audit Committee pre-approves all auditing services and permitted non-audit services (includingthe fees and terms thereof) to be performed for us by our independent auditors, subject to the de minimisexceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934,which are approved by the Audit Committee prior to the completion of the audit. The Audit Committee mayform and delegate its authority to subcommittees consisting of one or more members when appropriate,including the authority to grant pre-approvals of audit and permitted non-audit services, provided thatdecisions of such subcommittee to grant pre-approvals are presented to the full Audit Committee at its nextscheduled meeting. During 2007, the only services provided by the Deloitte Entities that were notpre-approved by the Audit Committee were de minimis services related to the issuance of an agreed-uponprocedures report in connection with a debt financing transaction by Public Service Company of NewHampshire for which the Deloitte Entities received a fee of $5,000. The Audit Committee approved these deminimis services prior to the completion of the audit. The Deloitte Entities did not provide any other servicesthat were not pre-approved by the Audit Committee.

The Audit Committee has considered whether the provision by the Deloitte Entities of the non-auditservices described above was allowed under Rule 2-01(c)(4) of Regulation S-X and was compatible withmaintaining auditor independence and has concluded that the Deloitte Entities were and are independent of usin all respects.

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REPORT OF THE AUDIT COMMITTEE

The Audit Committee is solely responsible for oversight of the relationship of Northeast Utilities withour independent auditors on behalf of the Board of Trustees. As part of its responsibilities, during 2007, theAudit Committee:

Š Received from the independent auditors the written disclosure, including the letter from theindependent auditors required by the Independence Standards Board Standard No. 1 and hasdiscussed these matters and the independent auditors’ independence with the independent auditorsas required by the Securities and Exchange Commission independence rules, Rule 2-01 ofregulation S-X;

Š Discussed with the independent auditors the matters required to be discussed by Statement onAuditing Standards No. 61; and

Š Reviewed and discussed the audited consolidated financial statements of Northeast Utilities forthe years ended December 31, 2007 and 2006 with management.

The Board of Trustees and the Audit Committee are aware of the requirements of the Sarbanes-OxleyAct of 2002, the related increased scrutiny of financial statement disclosures of publicly held companies andthe related rulemaking issued by the Securities and Exchange Commission. The Audit Committee hasdiscussed the appropriateness and adequacy of disclosures in the consolidated financial statements withmanagement and the independent auditors in light of this guidance.

Based on the review and discussions referred to above, the Audit Committee recommended to theBoard of Trustees that the audited consolidated financial statements be included in Northeast Utilities’ AnnualReport on Form 10-K for the year ended December 31, 2007 for filing with the Securities and ExchangeCommission.

The Committee has directed the preparation of this report and has approved its content and submissionto shareholders.

Respectfully submitted,

John G. Graham (Chair)Richard H. Booth (Vice Chair)James F. CordesElizabeth T. KennanKenneth R. LeiblerJohn F. Swope

Dated: February 19, 2008

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OTHER MATTERS

The Board of Trustees knows of no matters other than the foregoing to come before the meeting.However, if any other matters come before the meeting, the persons named in the enclosed proxy will vote intheir discretion with respect to such other matters.

By order of the Board of Trustees,

KERRY J. KUHLMANVice President and Secretary

ANNUAL REPORT TO SHAREHOLDERS ANDANNUAL REPORT ON FORM 10-K

Northeast Utilities’ Annual Report to Shareholders for the year ended December 31, 2007, includingfinancial statements, is being mailed with or prior to this Proxy Statement. We will mail an additional copy ofthe Annual Report to any shareholder upon request. We will provide shareholders with a copy of our AnnualReport on Form 10-K for the year ended December 31, 2007 filed with the Securities and ExchangeCommission on February 29, 2008, including the financial statements and schedules thereto, without charge,upon receipt of a written request sent to:

O. Kay ComendulAssistant SecretaryNortheast UtilitiesPost Office Box 270Hartford, Connecticut 06141-0270

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